Brunswick Corporation today announced it has entered into a definitive agreement to sell its fitness business to KPS Capital Partners, LP, a private investment firm, in an all-cash transaction for approximately $490 million.
Following completion of the sale, Brunswick will be comprised solely of its global marine portfolio, which includes market-leading positions in propulsion, parts and accessories, boats and services.
“With the sale of the fitness business, we sharpen our focus on Brunswick’s unique and formidable marine platform,” explained Brunswick CEO David Foulkes. “Brunswick has an impressive stable of recognized and respected brands and offers the right products and services uniquely concentrated in growing and emerging marine market segments. Brunswick is exceptionally positioned as a leader in the marine industry, and we are excited about the bright future ahead of us.”
The signing of this agreement is the culmination of a thorough process led by Brunswick directors Dave Everitt and Dave Singer that was designed to best position the fitness business for the future and maximize value for Brunswick shareholders, according to Foulkes.
“As we considered avenues to separate our fitness business, including a potential spin-off, we received strong buyer interest from a number of parties. After thoughtful evaluation of a range of options and a robust auction process, we concluded this sale is the best outcome for Brunswick and our shareholders. With some of the strongest brands and most accomplished people in the industry, the fitness business is well positioned to succeed. We thank our fitness employees for their many contributions to Brunswick and wish them well in the future.”
Brunswick had more than $4 billion annual revenue from its marine products and services in 2018. The fitness business will be reported as a discontinued operation starting in the second quarter, matching the guidance already provided on a marine-only basis.
“Consistent with our communicated plans, our capital strategy is focused on maintaining a strong balance sheet, investing in organic growth initiatives and returning value to our shareholders. Importantly, we will work with our board in the near-term to refine plans to deploy the capital from this transaction to increase shareholder returns,” Foulkes concluded. “As we have previously described, likely options will include engaging in share repurchases, accelerating planned debt retirement, and deploying additional capital for mergers and acquisitions. Any benefits generated by these potential actions are not currently reflected in our 2019 capital plan or guidance.”