Beneteau Group estimates acquisition at less than $100 million

Posted on Written by Reagan Haynes

Beneteau Group isn’t saying how much it spent last week to acquire Rec Boat Holdings, but CFO Patrick Guilloux gave some indication of the overall investment the company made.

“If you consider the cost of acquisition and if you consider the investment to bring new products into the factory in Michigan and the tooling and molds that make the Beneteau and Jeanneau boats, all in the next four or five years, the total costs of investments should be less than $100 million,” Guilloux told Trade Only Today. “We’re talking about the complete project’s medium term, not only the acquisition costs.

“As we market the Beneteau and Jeanneau boats [under 10 meters] in North America, we will have to move production, and that has a cost because we have to make up new tooling and send it to the factory,” Guilloux said, as well as other development costs associated with the transaction.

The Great Recession launched a seemingly endless cycle of bankruptcies and sales of boatbuilders and the fallout is still occurring six years after the bottom dropped out of the financial world.

But Rec Boat Holdings — consisting of four brands scooped up by Platinum Equity after Genmar went belly-up in 2010 — is the first large company that was bought out of bankruptcy by a private equity firm and has now been sold, in this case to established boatbuilder Beneteau.

And because people assume that private equity firms are in the business of making a company financially sound again before selling, a process that typically takes between two and four years, the completion of the private equity cycle should make dealers of the four brands more at ease than when the future was unknown, Rec Boat Holdings president Roch Lambert said.

“Dealers still have a little bit of discomfort when their company is owned by private equity because they know there’s going to be a transaction in the end,” Lambert told Trade Only Today. “They could be sold to Brunswick or a competitor company or another private equity firm that could milk the product and not really care. We got lucky because we got a partner who really invested in the company for four years and made us attractive to someone like Beneteau.”

The cycle was ideal for Rec Boat Holdings, which consists of Four Winns, Glastron, Scarab and Wellcraft, Lambert said. But when private equity is involved, there are always unknowns.

“The Platinum guys were wonderful for us,” he said. “They showed us a lot of patience. They believed in us. They gave us the financial tools we needed and positioned us very well.

“Now we can go back to our dealer network and say we’re part of a company that’s been building boats for 130 years,” Lambert said. “When dealers are looking for stability, consistency, then they are given a phenomenal answer to that question. Beneteau will be building boats forever. They’re not going to look at divesting. This is what they do.”

The acquisition positions Beneteau as “one of the largest powerboat players in the world, with a significant presence in all developed boating markets,” Jimmy Baker, an analyst with B. Riley, told Trade Only.

“This is a significant consolidation development, as Beneteau jumps from around $400 million powerboat revenue to more than $550 million,” Baker wrote in an informal note to investors.

“Beneteau is putting its money where its mouth is by making a clear organic and inorganic push into North America,” Baker said in the note obtained by Trade Only. “Generally speaking, we would expect Beneteau, a strategic owner, to be more aggressive with regard to growth investment versus Rec Boat Holdings’ former private equity sponsor, though Platinum Equity should be credited with supporting these brands through the marine industry’s depression and relaunching the Scarab line as an innovative jetboat line.”

Guilloux said he wasn’t sure how Baker arrived at those numbers, but he did say that “with this acquisition we will be becoming a very significant” world player.

What Beneteau actually bought in the deal, he said, was the manufacturing capabilities of the Cadillac, Mich., plant, four recognized brands, an advanced dealer network and an excellent senior management team led by Lambert.

Jeanneau and Beneteau have four North American dealers. “More than 200 dealers joined that group overnight,” he said. “That’s going to be a great help to develop the Beneteau and Jeanneau brands in America.”

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