Malibu has deal to buy Cobalt Boats

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Cobalt Boats is being acquired by publicly-traded Malibu Boats. Shown here is Cobalt’s A40 Coupe.

Cobalt Boats is being acquired by publicly-traded Malibu Boats. Shown here is Cobalt’s A40 Coupe.

Malibu Boats entered into “a definitive agreement” to buy privately-owned Cobalt Boats for $130 million.

The agreement is subject to adjustment for any settlement or judgement in connection with pending patent litigation between Cobalt and Sea Ray Boats, which is owned by Brunswick Corp.

The combined business is anticipated to deliver approximately $7.5 million in synergies and operational improvements, expected to be realized by the fourth year post-closing, and approximately $18 million in expected tax benefits.

The transaction is expected to close in early July, subject to customary closing conditions.

Cobalt Boats, founded in 1968, manufactures mid- to large-sized sterndrive boats, and recently expanded into the surf and outboard markets.

For the last 12 months that ended March 31, Cobalt generated approximately $140 million in net sales. The company sells its 24 models through a dealer network of 132 locations in the United States, Canada, and overseas.

“It is hard to know where to start, given how positive we are about this opportunity,” Malibu Boats CEO Jack Springer said in a statement issued this afternoon. “We are excited at the prospect of combining two iconic brands with extensive dealer networks, leading market shares, and strong product innovation. We are very excited about bringing Cobalt, its proven management and experienced employees into the Malibu family. Cobalt is a well-recognized market leader and world class brand with a rich history of delivering performance, innovation and uncompromising quality. In addition, the St. Clair family is known for their passion and integrity and this has been proven and re-proven throughout this process.”

Following the completion of the transaction, Malibu, with its headquarters in Loudon, Tenn., will maintain “an important and visible presence in Neodesha, Kansas, Cobalt’s headquarters,” Malibu said.

Cobalt CEO Paxson St. Clair will continue to lead the Cobalt business as its president and he will become a director on Malibu’s board of directors after the transaction is completed.

“This is an outstanding opportunity for Cobalt, our employees, and our dealer network,” St. Clair said. “As our focus has always been on the long-term success of the company, Malibu brings us a new level of opportunity through accelerated growth and brand awareness. I look forward to working with the Malibu team and continuing our legacy of market leadership.”

The transaction is expected to be accretive to Malibu’s earnings per share in fiscal year 2018, excluding purchase accounting adjustments and acquisition costs. In connection with the transaction, Malibu expects to benefit from tax attributes valued on a present value basis at approximately $18 million.

Malibu will fund the transaction through borrowings under a new second amended and restated credit facility.

Moelis & Company LLC is acting as Malibu’s financial advisor and O’Melveny & Myers LLP is acting as Malibu’s legal counsel. Raymond James & Associates is acting as Cobalt’s financial advisor and Foulston Siefkin LLP is acting as Cobalt’s legal counsel.

“This acquisition is consistent with our disciplined, long term growth strategy, and we believe it provides us with an immediate leadership position in a key segment of the recreational boating industry, while allowing us to diversify our product offering and tap into an exceptionally strong dealer network to accelerate Malibu’s growth and profitability,” Springer said.

“The addition of Cobalt will expand our distribution footprint and allow us to grow both brands across the combined dealer network presenting both customer bases with an array of product offerings. The addition of Cobalt will also provide us with a number of vertical integration and market opportunities that we believe will create significant value for our stakeholders.”

 

Comments

5 comments on “Malibu has deal to buy Cobalt Boats

  1. Pete Dierks

    Congratulations to the St. Clair family for creating and sustaining an iconic brand in an industry that evolves rapidly and is ever so sensitive to seasonal and economic influences. The initial sadness of liquidating a brand that is undeniably the best in its class is soon sidetracked by the countless contributions Cobalt Boats has made to this incredible industry. Perhaps the greatest achievement is the heightened level of integrity, trust and professionalism experienced by all who had the pleasure of doing business with the warm folks in Neodesha. I hope the tradition continues.

  2. Joe Allen

    What a bummer…. Malibu is a great brand but Cobalts is iconic. The trademark will remain but the brand gets diluted in my view. Time will tell… We should have known something was up with all the model adding and scrambling that’s gone on the pasr 5ish years along with deckboat, wakeboard AND gasp pontoon models….

  3. Jon

    Could not agree more Joe. In today’s corporate talk world of blah, blah, blah, it was nice to have a boat builder who really strived for quality. If you’ve ever owned one, you understand. This is Ford buying Mercedes, and another prime example of losing the finer things in life

  4. Jack Cox

    Cobalt is in an entirely different league than Malibu. Cobalt is the Porsche of boats and Malibu produces great boats but it really it really isn’t in that class. Cobalt should have bought Malibu. I was in Monte Carlo last year during their boat show and there was Cobalt with a display of its boats. The newer COBALTS no longer have real wood dashes with real displays and now they are all glorified Apple mini size screens. Gone are the wood and leather steering wheels. I have a 2008 222 and I am sorry the newer boats haven’t got the feel of the older ones. The StClares did a great job but everytime you see a merger like this there are huge changes in product of the company being acquired and the leadership will change, No way around it! I am sure this will be my last Cobalt. Hope they don’t become glorified wake board boats.

  5. Rob Myers

    No boat powerd by a stearn drive has ever been “Worl Class”. Hopefully Malibu will introduce better power trains to Cobalt.

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