Brunswick makes stronger commitment to marine industry

Author:
Publish date:
Brunswick Corp. will focus exclusively on its marine brands — including Mercury Marine and Boston Whaler — now that it is spinning off its fitness division. Shown here is the new Boston Whaler Realm 350 with triple 350-hp Mercury Verado engines.

Brunswick Corp. will focus exclusively on its marine brands — including Mercury Marine and Boston Whaler — now that it is spinning off its fitness division. Shown here is the new Boston Whaler Realm 350 with triple 350-hp Mercury Verado engines.

Brunswick Corp. is going to spin off its fitness business, making the company a player exclusively in the marine space with its engine segment and 14 boat brands.

The new fitness business will become an independent, standalone, publicly traded company called FitnessCo.

"Our board of directors and management regularly review our portfolio of businesses and brands, and after careful review, have determined that a spin-off of the Fitness business is the best option to maximize the value of both businesses," said Brunswick chairman and CEO Mark Schwabero in a statement.

The move comes as little surprise after a hedge fund requested a spin-off of the fitness business after building an activist stake in the company, which was followed by a company statement saying Brunswick is “always open to constructive input from our shareholders.”

On Jan. 30, Owl Creek Assets Management managing partner Jeffrey Altman asked Brunswick’s board of directors to take an “immediate” review of the possibility.

“We believe that now is an excellent time to execute on this transaction, as continuing to delay it only slows the process of reducing the conglomerate discount, and increases the risk of operational missteps,” Altman wrote,

“Furthermore, the longer these businesses remain together, the greater the chance is that the company’s overall execution is less than optimal, which directly harms all stakeholders in the business,” Altman wrote.

"With this action, FitnessCo will be positioned to continue to grow, innovate and provide customers with high-quality solutions while also ensuring that the Marine business is best positioned to continue creating value for our shareholders,” Schwabero said in today’s statement.

Brunswick has been quickly shedding major components of its operations — Dec. 5 it announced it would sell Sea Ray, once considered the cornerstone of its marine business. The company said in January that it expects to take a $35 million to $40 million loss on the transaction. A buyer has not yet been announced.

SunTrust analyst Michael Swartz said overall his firm liked the move and believed investors in Brunswick would applaud it.

“We had believed there was increased potential for Brunswick Corp. to spin-off its Fitness unit, particularly in light of its recent Sea Ray divestiture as well, as efforts over the past 5 to 7 years to reduce cyclically in its marine business and optimize its capital structure and balance sheet,” Swartz wrote.

The fitness business will stay at its Rosemont, Ill., headquarters and will continue with Jaime Irick as company president.

“We are pleased to have built two well-established businesses that are clear leaders in their respective industries, and both will benefit from greater focus and dedicated leadership with each pursuing distinct strategic plans that will drive targeted investment, attractive growth and shareholder returns,” he said.

Related

ABYC Foundation Seeks Nominations for Educator Award

The award recognizes “an outstanding instructor who is shaping future marine service technicians.”

P.R. Firm Rushton Gregory Signs ePropulsion

The Chinese manufacturer of electric propulsion products introduced a standardized lineup earlier this year.

Dometic Updates Pro-Trim System

The new design allows boaters to trim the outboard and adjust the jack plate without removing their hands from the wheel.

Brunswick Partners with Carnegie Robotics

Through the alliance, Brunswick aims to enhance its autonomous technology offerings.

Nicole Vasilaros to Depart NMMA

The group credits the senior vice president of government and legal affairs for “countless contributions to the protection and expansion of the recreational boating industry.”

Site Unseen

A website is often the first interaction a customer will have with a dealership, but it must provide more than an online brochure or they will click elsewhere.

C.G. Amends Documentation Rules

Federally documenting a boat now must be done every five years, rather than annually.

The 2021 Top 10 Most Innovative Marine Companies Awards

The marine industry consistently honors products and people. The industry, however, has not recognized forward-thinking companies that are moving the industry in new directions. Soundings Trade Only’s mission is to reflect, inform and inspire.