This is a developing story, but in a shocking mid-day announcement, Polaris has announced it intends to not only spin off its Indian Motorcycle business into its own separate company, but that it then intends to sell the legacy American motorcycle brand to Carolwood LP, a private equity group, who has put former Vance & Hines CEO Mike Kennedy, who also worked for Harley-Davidson for two decades, in charge of the company.
In a press release sent out moments ago, Polaris CEO Mike Speetzen stated, "Polaris and Indian Motorcycle both stand to benefit from this deal, which will enable each business to move faster, deliver industry-leading innovation, and lean further into our respective market strengths. For Polaris, the sale will further strengthen our focus on the areas of our portfolio that offer the strongest growth potential and allow us to accelerate investments in key initiatives and create wins with customers and dealers. It also will unlock greater long-term value for Polaris and our shareholders, with immediate value creation that we expect will become increasingly meaningful over time."
The executive added, "Under Polaris’ ownership and investment, Indian Motorcycle has been re-established as a celebrated brand and major player in the global motorcycle market. With its current product portfolio, global dealer network, category expertise and manufacturing resources, the Business is well positioned to succeed as a standalone company with a dedicated focus on its industry. We were highly intentional and selective in our search and planning efforts for Indian Motorcycle’s next chapter of growth. In Carolwood, Indian Motorcycle has a partner that believes in building on the Business’ current momentum and supporting its next stage of success. We are confident and committed to making this a seamless transition for Indian Motorcycle dealers, customers and employees."
This is something no one really saw coming, as while Polaris has had a rough year due to a list of factors, most involving the American marketing pulling back on its spending due to economic turmoil and chaos, as well as unemployment and high interest rates leading to lackluster sales, the sale of Indian just wasn't a rumor at all.
As for Indian's future, the private equity group that purchased the company, Carolwood LP, which has food and beverage labels under its leadership, as well as a sports outlet, picked Mike Kennedy to run Indian Motorcycle after current CEO Mike Dougherty retires when the transaction is done. According to the release, Kennedy was the CEO of the RumbleOn dealership group, the CEO and President of Vance & Hines, and worked at Harley-Davidson in multiple leadership roles for 26 years.
That, however, isn't all.
According to the release, there will be some changes in staffing through the transaction, as the companies state, "As a part of the deal, approximately 900 employees will transition as a part of the new Indian Motorcycle Company. Indian Motorcycle will retain the majority of its team, including engineers, designers and staff, along with manufacturing resources. Manufacturing facilities in Spirit Lake, Iowa, and Monticello, Minn., as well as the industrial design and technology center in Burgdorf, Switzerland, will transition to the new standalone motorcycle company as a part of the deal."
Emphasis mine, as, currently, Indian employees north of 1,000 people across its business. And retaining the majority isn't maintaining the full and current headcount. Some likely have dual roles within the larger Polaris ecosystem, but it's unclear as of now just how many people will be affected by the transition.
Polaris ended the statement saying that the company is optimistic about its future, as its third quarter results are due soon, and according to the preliminary numbers, "we expect third quarter sales to be at the high end of our previously issued guidance range," and that's "meaningfully higher than our original expectations, driven by higher-than-expected shipments, strong cost management and ongoing progress within our operational efficiency initiatives."
How Indian plays into the larger structure of Polaris' operational efficiency initiatives isn't clear. Again, this is a developing story with huge ramifications within the industry, and we'll have more on this soon as we get it. Stay tuned.
