Grand Banks Yachts Ltd. is buying Australian boatbuilder Palm Beach Motor Yacht Co. for $10 million Australian, which is $9.4 million in U.S dollars.
Palm Beach founder and yachtsman Mark Richards will be appointed CEO of the enlarged group and Peter Poli will relinquish his role as acting CEO, but continue as chief financial officer of the group, when the deal is completed.
Grand Banks said its first-ever acquisition will allow the company to tap Palm Beach’s manufacturing processes and technology to further improve production efficiencies and position the brands to increase their global reach.
Under the agreement, Grand Banks and Palm Beach will grant each other options that, when exercised, will see Grand Banks purchasing all of Palm Beach’s shares for as much as $8 million Australian in cash and $2 million Australian in new Grand Banks shares to be issued.
Grand Banks said a portion of the payment will depend on the financial performance of Palm Beach during fiscal 2014 and 2015. The manufacturing facilities of both brands will continue to operate at their respective locations — Grand Banks in Malaysia and Palm Beach in Australia.
Palm Beach, founded in 1995 outside Sidney, designs and builds five customized yacht models ranging from 45 to 65 feet that are mostly sold in the United States — its largest market. It was founded by Richards, 46, a seven-time champion skipper of the 628-mile Sydney-to-Hobart yacht race between 2005 and 2013.
Richards also led Australia to victory in the last Admiral’s Cup race in the U.K. in 2003 and has participated in two America’s Cup regattas, representing Australia.
“With Mark as incoming CEO, this critical leadership role will be filled by a qualified boatbuilder with a deep passion and experience for yachting, combined with a proven track record of technological innovation and success in building and marketing boats internationally,” Grand Banks chairman Heine Askaer-Jensen said in a statement. “It is a rare combination and a remarkable fit, coming at a critical juncture of Grand Banks’ own transformation.”
“This transaction is a major personal decision which is driven by my firm belief that the expanded investment and development of both Palm Beach and Grand Banks, together with the skills and collective will of the two brands, will combine to make the enlarged group one of the world’s leading luxury boatbuilding companies,” Richards said. “I have deep respect for the Grand Banks brand, and it will be a great honor for me to further strengthen the brand and to lead it to continued success.”
The transaction is subject to satisfactory due diligence and Grand Banks' shareholders’ approval at an extraordinary general meeting that will be convened. Assuming that all conditions are met, Grand Banks will issue Richards 11.03 million in new company shares at $0.2126 Singaporean dollars each, which he must hold for at least two years from completion of the transaction.
That would give Richards a 6 percent stake in the enlarged share capital of Grand Banks, which would increase from its current 173 million shares to 184.03 million shares.