The Great Recession launched a seemingly endless cycle of boatbuilder bankruptcies and sales, and the fallout is still being felt six years after the bottom dropped out of the financial world. But Rec Boat Holdings — consisting of four brands that Platinum Equity scooped up 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, says Rec Boat Holdings president Roch Lambert.
“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 says. “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.”
Facilitating the sale
Lambert had begun talking with Beneteau and Jeanneau people at the 2010 Paris Boat Show. “When I joined RBH in 2010, I started looking at the landscape,” Lambert says. “The best fit was going to be a strategic buyer, no matter how you looked at it.” During the next four years they continued to meet at shows — Paris, Miami and Fort Lauderdale.
“The fact that I speak French helps facilitate that,” Lambert says. “The guy that led the business at Platinum is also French Canadian like me. So in December I decided it was time to put our heads together and finalize something.”
Rumors and speculation by analysts that Rec Boat Holdings could go public in December played into his hands, Lambert says. “I said, it’s one of the options, but my whole hope was that they would get a sense of urgency. Things were headed in the right direction in spite of the fact that our segment of the market is still difficult. But we’ve done a lot of the investing we need to do moving forward already, and we’re a perfect fit for what they want to do in North America.”
Lambert eventually met Madame Annette Bénéteau-Roux, granddaughter of founder Benjamin Bénéteau and controlling shareholder of the group, who was “charmed by the idea, to use their words,” he says. “Frankly it was the right timing for them, from our perspective. For them, they had a lot going on, and I said, ‘But I have a whole team of people who are going to help you come get that done.’ ”
The Beneteau strategy
The Beneteau Group’s acquisition of Rec Boat Holdings — parent company of Four Winns, Glastron, Wellcraft and Scarab — will help the 130-year-old company further penetrate the North American powerboat market, according to Beneteau CFO Patrick Guilloux. The company’s goal is to eventually manufacture Beneteau and Jeanneau powerboats under 10 or 12 meters (32 to 39 feet) at Rec Boat Holdings’ Cadillac, Mich., facility. “After the [financial] crisis, we had to reshape the Beneteau Group strategy,” Guilloux says. “One of the major initiatives was to penetrate the powerboat market in North America.”
The cycle was ideal for Rec Boat Holdings, Lambert says. “The Platinum guys were wonderful for us,” he says. “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. 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.”
Beneteau isn’t saying how much it spent to acquire Rec Boat Holdings, but 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 said. “We’re talking about the complete project’s medium term, not only the acquisition costs.”
Beneteau says the acquisition is in line with the group’s development strategy for the North American market. Platinum Equity retains ownership of Flippin, Ark.-based Fishing Boat Holdings, maker of the Ranger, Triton and Stratos boat brands, which also were acquired when it bought the four other defunct Genmar brands.
“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 says, as well as other development costs associated with the transaction.
The new initiative began in 2010 when Beneteau began selling powerboats of 10 to 12 meters and above in the United States, although they continued to be built in either France or Italy, Guilloux says. “For small boats, we were always saying we would need a manufacturing footprint in North America. You cannot be competitive manufacturing [smaller] outboard boats in Europe and selling them in North America because freight costs would be very significant, in comparison to the selling price.”
The four Rec Boat Holdings brands also will leverage the solidly established European and global Beneteau dealer network to penetrate markets overseas, Guilloux says.
Lambert will continue to lead Rec Boat and will assume business development for Beneteau’s outboard brands in the United States, reporting directly to Beneteau Group CEO Bruno Cathelinais and working closely with Laurent Fabre, president of Annapolis, Md.-based Bénéteau America, Guilloux says.
“For sure, Laurent and Roch will work together closely because there are a lot of synergies to get worked out in the coming weeks and months,” Guilloux says. “As far as the Beneteau outboard business development in North America, Roch will be in charge, as long as we are talking about outboard powerboats. Laurent is marketing inboard and sailboats. They will work together.” Lambert also will lead the marketing efforts of the Rec Boat Holdings brands in overseas markets.
The 250 dealers representing Four Winns, Glastron, Wellcraft and Scarab will have an opportunity to represent the Bénéteau Group’s outboard products. “When we have our own dealer meeting in August we’ll have 20 or 30 boats on display [total] for dealers to look at, try out and see what suits their markets,” Lambert says. “When volumes [of Beneteau and Jeanneau sales] are large enough, the intent is we would build some of those boats in Cadillac.”
Beneteau powerboats and Jeanneau currently have four dealers in North America. “For them, it was more of a test last year than anything else,” Lambert says. “We’re coming in this year to help them develop that network and grow volumes.”
“More than 200 dealers joined that group overnight,” Guilloux says. “That’s going to be a great help to develop the Beneteau and Jeanneau brands in America.”
In the meantime, Rec Boat Holdings will take advantage of new opportunities abroad. “We evaluated what synergies we believe we will generate,” Lambert says. “We have a strong presence in North America and Canada, and now we have a phenomenal expansion opportunity with the rest of the world, and predominantly in Europe.”
Beneteau has a global manufacturing presence in Italy, France, Poland, Brazil and now the United States, Lambert says. “So we’re adding to a pretty impressive roster, depending on what market we want to penetrate.”
A big global player
The acquisition positions Beneteau as “one of the largest powerboat players in the world, with a significant presence in all developed boating markets,” says Jimmy Baker, an analyst with B. Riley. “This is a significant consolidation development, as Beneteau jumps from around $400 million powerboat revenue to more than $550 million.
“Beneteau is putting its money where its mouth is by making a clear organic and inorganic push into North America,” Baker says. “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 says he is not 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 says, 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.
The life cycle
Rec Boat Holdings has revenue of about $150 million and employs 475 people, and its entry into the Beneteau Group will “enable it to expand its access to the European and global markets,” the company says.
“After launching sales of motorboats over 12 meters in 2010, the group is embarking on the second phase of its project, with motorboats under 12 meters, which requires an industrial investment in America,” Beneteau said in a statement. “On its own, this segment accounts for nearly 40 percent of the overall motorboat market in the United States.”
California-based Platinum Equity Group’s PBH Marine Group announced that it had bought the brands out of bankruptcy in 2010, purchasing essentially all of the assets of Genmar Holdings for $70 million. PBH purchased 11 brands, including Ranger, Stratos, Champion, Wellcraft, Four Winns, Larson and Glastron.
Carver and Marquis were purchased for $6.05 million by J&D Acquisitions LLC, a company created by former Genmar owner Irwin Jacobs, along with John Paul DeJoria. Some additional brands were subsequently resold, including the Larson brand, which Jacobs also purchased.
“RBH has come a long way in the last four years, thanks to a lot of hard work, a strong management team, great support from the dealer network and the dedication of so many committed employees,” Platinum Equity partner Louis Samson, who led the acquisition, said in a separate statement.
“With the turnaround complete and the business on sound operational footing, the time is right for a transition to new ownership,” Samson said. “Beneteau Group is a world leader in boat manufacturing and is a perfect strategic fit for the Four Winns, Glastron, Wellcraft and Scarab brands. We are putting the business in good hands going forward.”
The sale of Rec Boat Holdings comes after four years of successful transformation and growth initiatives, the private equity firm says.
This article originally appeared in the August 2014 issue.