BRP launching marine group after buying fishing boat maker
TORONTO Recreational vehicle maker BRP Inc. is acquiring a U.S. aluminum fishing boat manufacturer, a move the company’s chief executive said is the first step in a broader strategy of becoming a major player in the marine industry.
The Valcourt, Que.-based company, which produces a range of recreational vehicles including snowmobiles and personal watercraft, announced Thursday it will purchase Alumacraft Boat, a privately held manufacturer that reported revenues of US$100 million in 2017 according to BRP. The acquisition will form the core of BRP’S new Marine Group, a division chief executive José Boisjoli hopes will “transform the marine business worldwide.”
“We’ve had very good momentum and felt, along with our board, that it was the right time to invest in the right business,” Boisjoli said in an interview.
“This is our first step in our marine strategy.”
Under Boisjoli’s leadership, BRP has set its sights on hitting revenues of $6 billion by 2020, up from the $4.5 billion it earned in the year ending Jan. 31, 2018, and was long expected to make a move that would expand its business portfolio. Boisjoli had previously said the company was looking at several options when it came to expansion, including acquisitions and partnerships.
The deal with Alumacraft will complement BRP’S existing Evinrude outboard motor business, the company said. Boisjoli said that about 10 per cent of Alumacraft boats have been outfitted with BRP’S motors, providing opportunity to convert more with the company’s technology.
“We had the idea that if we have a chance to design a boat and the engine at the same time and integrate it better ... we believe that we can make a difference and transform this segment of the industry,” Boisjoli said.
Over the short-term, Boisjoli said BRP will focus on optimizing Alumacraft’s existing dealer network, which features more than 275 dealers located in North America, as well as improving technology and manufacturing through the company’s existing expertise. Three years down the road, he expects BRP will come out with a series of new products that “will move the needle in the industry.”
While BRP did not disclose the financials behind the deal, Boisjoli said the company paid less than $100 million for the business.
National Bank Financial analyst Cameron Doerksen said the acquisition is a natural fit for BRP’S existing Evinrude business.
“Potential synergies for BRP include maximizing the two business’ dealer networks, selling more Alumacraft boats with Evinrude engines ... and integrating Evinrude engines into future boat models,” he wrote in a note to clients.
Doerkson also speculated that BRP will look to acquire additional boat-building companies to further grow its new marine segment.
“We also believe that the company is still actively assessing larger-scale M&A opportunities with a core focus in its powersports segments,” Doerkson said.
Desjardins Capital Markets analyst Benoit Poirier said the deal would strengthen BRP’S position in the marine market by complementing its Evinrude portfolio.
“While this transaction is not financially material for BRP, we believe it represents a compelling opportunity to solidify its exposure to the marine segment,” he wrote in a note to clients. “Additionally, the acquisition gives us confidence that management is committed to Evinrude.”
As BRP continues to pursue further growth, there are still some potential overhangs, including uncertainty surrounding NAFTA negotiations and steel and aluminum tariffs imposed by the U.S. administration.