Arctic Cat Inc. said Wednesday that it has bought back all of its stock from Japanese engine maker Suzuki Motor Corp., ending a shareholder relationship that goes back more than two decades.
The $79.3 million cash deal for approximately 6.1 million shares of Class B stock pleased investors, who drove Arctic Cat's share price to its highest single-day gain since March 2009. Shares closed at $22.93, up nearly 21 percent.
Arctic Cat, based in Plymouth, designs, engineers, manufactures and markets snowmobiles and all-terrain vehicles, as well as related parts, garments and accessories.
The company's move to buy out its longtime supplier was not entirely unexpected. Arctic Cat announced in June 2010 that it would stop buying snowmobile engines from Suzuki at the end of 2013 and move the manufacturing to its plant in St. Cloud.
"As Arctic Cat tries to become a more innovative company, operationally they've been moving apart," said analyst Craig Kennison, of Robert W. Baird and Co. in Milwaukee. "Financially they're now also severing some of those ties."
Suzuki will continue to supply engine parts beyond 2013, Arctic officials said Wednesday. A Suzuki representative resigned from Arctic Cat's board, effective immediately, and was not expected to be replaced.
Suzuki has supplied engines for Arctic Cat since 1976. It became a major shareholder in June 1988, paying $12.8 million for a 33 percent stake in the company, then known as Arctco. At the time, Arctco had just rebuffed a $25 million acquisition offer from Medina-based rival Polaris.
The relationship has paid off for Suzuki, including $57 million in buybacks and dividends plus $1 billion in sales of engines and parts over the past decade. Arctic officials said this played well as it negotiated what analysts viewed as highly favorable terms of the share repurchase deal.
