When Brunswick Corporation announced its intention to divest the iconic Sea Ray brand in December last year, negotiations were opened with a number of potential bidders. It seems that the field has since narrowed to a handful of serious players but it has been difficult to arrive at an acceptable valuation given the trading performance of the company in recent few years.
While still being an internationally acclaimed benchmark brand for well-designed quality products, Sea Ray is thought to have struggled to return a consistent profit for a number of years. In 2017 it recorded sales of $387.6m but suffered operating losses of $17.2m.
Sea Ray was acquired by Brunswick from its founder Connie Ray in November 1986 for $350m one month after the engine maker also acquired Bayliner for $425m, in a drive to become a more vertically integrated business by packaging engines and boats together. Several other purchases of boatbuilding companies followed until Brunswick became the world’s largest builder of recreational boats with over a billion dollars in annual sales, although it may well forgo its top position after this divestment.
Two potential front runners – Yamaha and Beneteau, which have both acquired US boatbuilding businesses in the past – have indicated to IBI during recent interviews that they are not interested in pursuing the acquisition of Sea Ray, and while another trade buyer might well purchase all or part of the business, an outside investor or private equity fund seems the more likely acquirer.
Brunswick’s stock price hit an all-time high last week, attributable in part to the imminent Sea Ray sale announcement, which analysts believe will boost company earnings.