
In August 2022, MarineMax announced that it was acquiring Island Global Yachting. MarineMax paid $480 million in cash, with an potential additional earnout in 2024 of up to $100 million, subject to the achievement of defined performance metrics.
On Tuesday this week, Andrew Farkas, the founder and former chairman of IGY issued a public letter to MarineMax shareholders, saying he wants to buy back the company — and then some — while noting that the potential $100 million earnout due in less than a year is now valued at $67.7 million and could be “favorably resolved” as part of a deal.
“I had every reason to believe (and continue to believe) that there are synergy benefits to the combination of IGY and MarineMax’s yachting and marina related services businesses, including Fraser Yachts and Northrop & Johnson,” wrote Farkas, who issued the open letter on behalf of Island Capital Group, a real estate-oriented private equity and merchant banking firm. “I had every reason to believe that IGY would thrive under its new owner.”
Farkas then lists all the reasons this belief has been shaken. He offers to purchase 100% or no less than 75% of the YMRS Business, which includes IGY along with the Fraser and Northrop & Johnson brands.
MarineMax did not respond to multiple requests for comment from Trade Only Today. A spokesman for Farkas said he was declining interviews at this time.
IGY Marinas is a collection of marinas in the United States, Europe, the Caribbean and Latin America. According to its marketing materials, the company serves more than 10,000 annual customers at 23 marinas in 13 countries.
Some of the better-known locations — all of which target the superyacht segment — include Yacht Haven Miami Grande at Island Gardens, in Florida; IGY Vieux-Port de Cannes, in France; St. Katharine Docks Marina, in London; Simpson Bay and Isle de Sol marinas on St. Maarten; and Yacht Haven Grande on St. Thomas.
During the acquisition of IGY Marinas in 2022, MarineMax CEO and president W. Brett McGill called the deal a “transformative transaction for MarineMax,” one that would position the company as a “preeminent leader in the superyacht industry.”
Farkas, in his letter to shareholders, stated that since the acquisition, numerous other things have happened instead.
He said MarineMax has reduced its fiscal year 2024 adjusted EBITDA and adjusted EPS guidance twice in its past two quarterly earnings reports, with adjusted EBTDA down a total of 27% and adjusted EPS down a total of 43% compared with initial guidance for the year. Specific to IGY, Farkas said that the brand has acquired no new assets while competitors have raised capital and developed and acquired assets; that MarineMax has failed to advance any of the growth initiatives IGY highlighted in the sales process; and that Tom Mukamal, who led IGY as CEO from 2010 to 2023, has left the company.
IGY’s current president is Steven English, who has been affiliated with IGY since 2007 and was previously a managing director at Island Capital Group.
“The acquisition of IGY has done nothing to distinguish MarineMax from its competitors,” Farkas said. “We believe that the YMRS Business is not a key focus of management. 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.”
Farkas noted that during the time he ran IGY, he oversaw the acquisition and development of every marina in the portfolio and more, giving him “second to none” knowledge and understanding of IGY, its businesses, its venues, its platform and the opportunities it presents.
He proposes acquiring the YMRS assets from MarineMax at a double-digit EBITDA valuation multiple, while stating that MarineMax currently trades within a five- to six-times multiple range.
“Our proposal could unlock significant value for shareholders,” he stated, adding that by contrast, MarineMax’s “rumored transaction with OneWater may undervalue MarineMax as a whole and would also carry significant contingencies and regulatory risk.”
In early June, reports surfaced that OneWater had made an all-cash, $40-a-share offer following months of private discussions.
Farkas, in his letter, further stated that “MarineMax has not created value in the YMRS Business. Regrettably, MarineMax has not been able to achieve any significant growth initiatives as stewards of IGY. Meanwhile, competitors have expanded their portfolios and have raised capital to fund acquisitions, potentially encroaching on IGY’s leading network and brand.”
It is unclear whether Farkas has attempted to negotiate privately with MarineMax. His letter stated that Island Capital Group is “seeking to engage with MarineMax immediately. We believe that a transaction could be completed in as little as 60 to 90 days, and we stand ready to commence a dialogue with MarineMax’s management and board of directors about any aspect of our proposal.”