Brunswick Corporation to Snap up Navico for $1.05B

Brunswick Corporation (BC) inked a deal to acquire Navico, a global leader in marine electronics and sensors, for $1.05 billion. The deal will strengthen Brunswick’s leadership position in marine technology and the global Parts & Accessories business.

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Brunswick Corporation develops, manufactures, and markets a wide variety of products for the recreational marine market. Shares of the company have jumped 57% over the past year.

Based in Egersund, Norway, Navico is a privately held company that provides multi-function displays, fish finders, autopilots, sonar, radar, and cartography equipment. Its popular brands serve most major powerboat and sailing markets for both recreational and commercial applications.

Through the acquisition, Brunswick will enhance its Advanced Systems Group (ASG) with the addition of the industry-leading brands of Lowrance, Simrad, B&G, and C-MAP, a list which includes the leading Parts & Accessories (P&A) brands in power management, digital control, and monitoring, and networked devices. (See BC stock chart on TipRanks)

Brunswick Corporation CEO Dave Foulkes commented, “The acquisition of Navico and its award-winning brands will immediately accelerate Brunswick’s ACES (Autonomy, Connectivity, Electrification, and Shared-Access) strategy, and support our vision to deliver distinctive new products and technology-enabled experiences.”

He further added, “We will continue to invest both in organic initiatives and acquisitions to maintain our position of global product leadership.”

Further, Navico boasts strong revenue growth, impressive margins, and a capital-efficient business model. For the year ended May 31, 2021, Navico reported revenues of $470 million.

Brunswick’s P&A segment reported $1.5 billion in revenues and accounted for 35% of total annual revenues in 2020. Upon completion of the deal, Brunswick expects its P&A revenues to surpass $2.0 billion.

Brunswick plans to finance the deal by using a combination of debt and cash on its balance sheet and expects its debt-to-EBITDA ratio to be approximately 1.7x on a gross basis.

The acquisition is expected to close during the second half of 2021, subject to certain regulatory approvals.

J.P. Morgan analyst Matthew Boss recently increased the price target on Brunswick from $106 to $113 (17.3% upside potential) and maintained a Buy rating.

Boss concluded after meeting Brunswick’s management that the company will be able to offset supply chain pressures. He believes sales trends look strong, with production on track and sustainable retail strength.

Overall, the stock has a Strong Buy consensus rating, based on 12 Buys and 2 Holds. The average analyst Brunswick price target of $120.79 implies 25.4% upside potential from current levels.