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Brunswick Pays $910 Million for Marine & Mobile Power Supplies

Brunswick Corporation (NYSE: BC) today announced that it has entered into a definitive agreement to acquire Power Products – Global Marine & Mobile business, which includes the global marine, specialty vehicle, mobile, industrial power, and transportation aftermarket products businesses of Power Products, for $910 million in cash. Brunswick will add 11 top brands, including Ancor, BEP, Blue Sea Systems, Czone, Del City, Lenco Marine, Marinco, Mastervolt, Park Power, Progressive Industries, and ProMariner.

Power Products is a privately held company based in Menomonee Falls, Wis., owned by San Francisco-based private equity firm Genstar Capital.  The acquisition will not include Power Products’ Electrical Construction & Maintenance business, including the Gardner Bender, Bergen and King brands, which will be retained by Genstar.

Power Products – Global Marine & Mobile is a leading provider of branded electrical products, such as battery and power management and digital switching, to marine and other recreational and specialty vehicle markets. The group also manufactures and distributes a broad and diverse portfolio of marine and transportation parts and accessories.

With facilities in the Netherlands, Mexico, New Zealand, China, and the United States, Power Products has substantial engineering resources, technical know-how and industry-leading integration and solution capabilities, along with upfront design expertise.

At closing, Power Products – Global Marine & Mobile will join Mercury Marine’s global parts and accessories (P&A) organization.  Mercury Marine is Brunswick’s largest division, and a global leader in marine propulsion as well as marine parts and accessories.

“This transaction advances Brunswick’s leadership by adding integrated electrical systems solutions to the marine market and an array of other mobile, specialty vehicle and industrial applications. Power Products has an extensive aftermarket presence which provides a more consistent revenue stream, with attractive margins, that helps to strengthen Brunswick’s overall business profile,” said Brunswick Chairman and Chief Executive Officer Mark Schwabero.

“We are also adding a talented, experienced and customer-focused management team, which is expected to remain in place and play a major role in the execution of our strategy,” added Schwabero.

Revenues for the business totaled approximately $233 million (for the trailing 12-month period ended March 31, 2018), with attractive revenue growth, along with strong margin and earnings levels. Mercury Marine’s P&A business accounted for about $1.3 billion – or about 28 percent – of Brunswick’s total 2017 annual revenues. With Power Products, Brunswick expects Mercury’s P&A business to have revenues on a run-rate basis that will exceed its previous 2018 target of $1.5 billion.

“Our marine strategy aims to better serve customers and drive value through enhanced sales and service to the broad and growing installed base of boats and engines,” Schwabero explained.  “We plan to leverage the unique expertise of each brand to generate revenue and operating synergies and promote growth for both Mercury Marine and Power Products with our broad, combined product portfolio.”

“Many of their products are highly complementary to Mercury Marine’s current P&A portfolio, with no overlap,” explained Mercury Marine President John Pfeifer.  “The addition of these sophisticated electronics solutions to Mercury Marine’s P&A portfolio will enable the combined operation to provide our customers with a wider array of unique, enhanced solutions, which will enhance our P&A business.”

Brunswick will be using a combination of debt and cash on its balance sheet to fund the acquisition.  Brunswick remains committed to maintaining its investment grade credit rating and expects to report a debt-to-EBITDA ratio comfortably below 1.5X by the end of 2019, including the anticipated impact of the planned Life Fitness spin.

Morgan Stanley & Co. LLC served as exclusive financial advisor; Morgan Stanley Senior Funding, Inc. has provided committed financing; and Cravath, Swaine & Moore LLP served as legal counsel to Brunswick Corporation on the transaction.

The closing of the transaction is subject to usual and customary closing conditions as well as regulatory review and approval, which is anticipated during the third quarter.

Brunswick Corporation , Power Products. LLC
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