Holiday RV Superstores Inc. has taken the first step toward building what it hopes will be a $1 billion retailer.
Holiday, in Orlando, Fla., is buying County Line Select Cars Inc., a chain of four RV dealerships in Ocala, Fla.
The acquisition is the first effort by an RV dealer to consolidate the 3,500 RV dealerships in the United States.
Holiday's timing is good. Aging baby boomers are swelling demand for RVs. And late this summer, some Houston-area investment bankers failed in their bid to start a similar consolidation.
The failure of the Houston group, RV Centers Inc., clears the path for Holiday to approach some of the stores that had been on RV Centers' list, said Michael Riley, Holiday chairman.
Riley, whose Atlas Recreational Holdings recently bought 58 percent of Holiday, is a merger and acquisition lawyer with a network of contacts on Wall Street.
'The RV Centers dealers have made the mental commitment to be part of a large public dealer group,' Riley said. 'They are a solid group of managers who are prepared for the consolidation process.'
But significant hurdles remain for Holiday. RV dealers are traditionally independent-minded, mom-and-pop style stores. Bringing them into the fold of a large public company will take some finesse, Riley said. And Wall Street has traditionally been fickle toward Holiday's one-of-a-kind stock. For the past several years, the stock price has hovered around $3.00 per share. It hit a 52-week low of $2.28 on April 7. But after news of the pending acquisition broke late last month, Holiday's stock price hit its 52-week high, $5.66.
County Line, with four outlets in and around Ocala, was the largest store on RV Centers' list of targets. Riley said he is looking at several other stores on that list.
Holiday, the only publicly traded RV dealership group in the country, reported record revenue of $64.1 million through the first nine months of fiscal 1999, ended July 31. County Line had sales of $70 million for the year ended Aug. 31. Terms of the stock and cash deal, which should close by year end, were not disclosed.
In an interview, Riley and Holiday's CEO, Hardee McAlhaney, were quick to point out several differences between their roll-up strategy and that of RV Centers.
Holiday operates stores in four states and has nearly a decade of experience running a public company. RV Centers had never operated a public company and was trying to create one from scratch. None of the 14 dealers targeted by RV Centers had worked together.
In targeting stores for acquisition, Holiday is looking for management that likes the idea of publicly held stores, McAlhaney said.
'We want to know that they buy into the concept of a public company and realize the value of what they are doing,' he said.
Another factor is the product each store carries. Holiday has a tradition of selling mid-priced travel trailers, motor homes and services, McAlhaney said. Any acquired stores will feature a similar product mix.
These requirements limit the pool of potential stores from which Holiday can choose. Of the 3,500 RV dealers in the country, only about 400 have the combination of management and product mix Holiday seeks, McAlhaney said.
But while a $1 billion retail chain is the goal, Holiday will not sacrifice quality product offerings and responsive service to get there, McAlhaney said, adding: 'We don't have a desire to have a store on every corner. That's not what we're all about.'