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Shareholders of Marinemax have responded to an open letter issued by CEO and founder of Island Capital Group, and founder of IGY Marinas, Andrew L. Farkas.

In Farkas’ letter, issued yesterday (10 July 2024), he suggests an acquisition “of up to 100 per cent” of the company’s YMRS Business (comprising IGY Marinas, Northrop & Johnson and Fraser) from MarineMax.

Farkas sold IGY to MarineMax in 2022, in a $480m cash deal, and now has his eyes on repurchasing it. Farkas — who was the founder and former chairperson of Island Global Yachting — says it is “a company I built, from scratch, over an approximately 20-year period and sold to MarineMax.”

In his initial letter, Farkas claims IGY Marinas, Fraser and Northrop & Johnson are not a “key focus of management” for Marinemax, and the portfolio was an “afterthought.” As such, he argues, this is leading to falling revenues.

“The MarineMax management team does not spend a meaningful amount of time discussing these assets on its earnings calls. The company’s investor materials also reflect the view that this portfolio is an afterthought,” he writes. “Furthermore, there are no meaningful synergies between the retail boat business and the YMRS Business. The YMRS Business is a real estate and luxury services business, whereas the retail boat business is a product business. The customer bases are completely different.”

In the letter, Farkas also says: “It is through this lens that I am making an open proposal to acquire up to a 100 per cent interest in the YMRS Business from MarineMax. Based on publicly available information, we believe that this portfolio of assets is not adequately valued by the public market and thus has added no value to you as shareholders.

“We propose acquiring the YMRS assets at double-digit EBITDA valuation multiple, while the company currently trades within a five to six times multiple range. Thus, our proposal could unlock significant value for shareholders.

“A sale of the YMRS Business would provide a substantial amount of cash for the company at a time when its core business is under pressure, and the proceeds could be utilized in an accretive fashion to repurchase stock, deliver the company and/or pursue acquisitions in the company’s core business.

“Additionally, to the extent desirable, ICG is willing to acquire less than 100 per cent of the YMRS Business (although not less than 75 per cent), allowing MarineMax to retain some ownership and potentially benefit from ICG’s growth strategy.”

Farkas says that ICG is seeking to engage with MarineMax “immediately” and he believes a transaction could be completed in “as little as 60-90 days”.

In a statement issued yesterday to Boat, Marinemax responded: “We are in receipt of the letter from Island Capital Group and will review it. The MarineMax Board of Directors is open-minded and regularly evaluates bone fide opportunities to enhance shareholder value. We will continue to make decisions and take actions that we believe are in the best interest of the company and our shareholders.”

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