Shipyard Mergers and Acquisitions, Part 1
If owning a yacht is a status symbol, what does it mean to own or invest in a shipyard? Depending on the yard, there are a number of courses the investors can chart. There are the owners that want to reshape the yard in their vision, and there are investors who just offer a capital infusion and allow the shipyards to continue growing. Follow our series examining recent shipyard acquisitions.
Blohm + Voss, January 2012
Rendering of an 88-meter megayacht and tender, courtesy of the yard
Blohm+Voss had spent months displaying at boat shows with what were expected to be its new partner yards after the acquisition by Abu Dhabi Mar was complete. Then a press release announced the deal—with the British investment firm Star Capital Partners.
The deal with Abu Dhabi Mar group had included the civil shipbuilding division as well as the military division, Blohm+Voss Naval. “Following two years of amicable talks and negotiations exploring the joint-venture both ThyssenKrupp Marine Systems and Abu Dhabi MAR have agreed to cease their efforts to form the envisaged joint-venture around the naval and non-naval shipbuilding business of Blohm+Voss in Hamburg,” a statement said. “Both parties believe that the commercial drivers for the transaction have weakened to a point that opportunities previously identified are no longer commercially viable.”
London-based Star Capital ended up acquiring the civil divisions including: Blohm + Voss Industries, a provider of highly complex marine components; Blohm + Voss Repair, a ship repair and conversion business including Blohm + Voss Oil Tools; and Blohm + Voss Shipyards, a shipbuilder focused on luxury megayachts. The deal received final approval in early 2012.
In a statement at the time, Tony Mallin, CEO of Star Capital, said, “We are pleased to have acquired a world-class German engineering business; one in which we intend to invest by providing a significant capital commitment to drive growth and job creation.”
With the shipyard remaining in Hamburg, the divisions of Blohm + Voss will continue to partner on upcoming projects. The construction of four F125-class frigates for the German Navy will continue with Blohm + Voss Naval, which is still owned by ThyssenKrupp Marine Systems,
“Investors Star Capital Partners are an excellent match for Blohm + Voss,” emphasizes Dr. Herbert Aly, the Blohm + Voss CEO, commenting on the change of ownership. “Their commitment will enable all three companies to continue to develop their business models, since we are not only active in booming markets but have a huge market potential.”
Michael Brasse, head of corporate communication, says Star Capital is involved in specialized technologies in very specialized companies, so a shipyard isn’t too far out of bounds for the investment firm.
After taking the last year to establish a new organizational step, the next step is to get the yard full again. As usual, there are projects that the yard can’t comment on. The repair yard currently has a few commercial projects underway.
“During the selling process, no risks were taken for new orders for yacht building,” Brasse says. “Now we have to say Blohm + Voss is back on the market and refresh contracts with the brokers and designers.”
The Chinese company Weichai was clearly on the prowl for a luxury yacht brand. Before taking a 75% interest in the Ferretti Group, the company had original placed an offer on Couach Yachts. But before the ink could dry on the deal, the owner of the French shipbuilder passed away, and the family decided to sell to a French investment group.
Couach, November 2011
Above, the 2600 Fly, one of the new models under construction after the merger, courtesy of the yard
A change in ownership always means a fresh start but it doesn’t always mean a restart. After more than 100 years of shipbuilding, the 300 shipbuilders at the Bordeaux-based shipyard, Couach Yachts, have developed an expertise for yacht construction, and the yard’s new owners intend to keep that history alive.
On November 21, 2011, the French investment group Nepteam signed the deal to acquire Couach Yachts from the Vial family, shortly after the unexpected death of owner Fabrice Vial. The deal included both the construction facilities in Gujan-Mestras, which builds both deep-V luxury yachts and military vessels, and the refit facilities in Saint Mandrier. (Couach had only acquired the IMS refit yard in 2005.)
“Since the second half of 2011, Nepteam wanted to invest in a business in the Bordeaux region in the luxury sector or high tech. We did not want to launch, like many, in the IT or electronic sectors that have been extensively exploited in past years,” says Christian Chevalier, president of Nepteam. “Nepteam shareholders were particularly attracted by the notoriety of the Couach brand and by the know-how of the teams in place, in particular in the composite materials.”
At the time of the deal, the Chinese company Weichai was also interested in making the acquisition, but the company would later go on to invest in the Ferretti Group.
Since the acquisition, the yard has launched two private yachts, a 50-meter and a 23-meter, as well as the remaining six of a contract of 15 of intercepter yachts. The 50-meter La Pellagrina is the largest launch to-date for the yard.
But the yard wasn’t idle when yachts weren’t being launched and the vast majority of the workers were able to stay on and receive additional training. “The periods with less work were devoted to cross functional training, which will be useful in the coming months in terms of flexibility,” Chevalier says.
One notable departure was the former president, who was replaced by Christophe Kloeckner in July 2012. The remainder of the management team remained in place.
After a year’s absence, the yard debuted the 50-meter La Pellagrina at the Cannes and Monaco yacht shows as well as made an appearance at the Salon Euronaval for naval and military vessels in 2012.
With a strong tradition in shipbuilding, Couach is looking to approach its next chapter with new designs and new technologies.
“The shipyard has proposed a brand new line of products demonstrating strong commitment to modern design lines and quality that have made the reputation of the company. We also would like a smaller range of boats with a fast boat of 13 or 15 meters named Hornet,” Chevalier says. “Beyond that, Couach is aggressively approaching research and development to improve comfort (noise and vibrations), embedded quality of manufacturing, and advanced composite systems.”
Ferretti Group, January 2012
Above, the interior of the Mondolfo shipyard, courtesy of the yard
Ferretti Group is not usually a company to shy away from acquisitions—from the purchase of Riva in 2000 to Bertram in 2008. This time, however, the Ferretti Group was the one joining the umbrella of Shandon Heavy Industries Group-Weichai Group.
The Chinese equipment manufacturer now has a 5% interest in Ferretti after investing 374 million euros, including equity investment of 178 million euros and provision of debt financing of 196 million euros.
“Developing the yacht business is one of the Group’s strategic goals for the next five years,” says Mr. Tan Xuguang, Chairman of SHIG—Weichai Group and Ferretti Group, in a statement at the time. “Ferretti, which possesses iconic international brands, state-of-the-art manufacturing technologies, products of the highest quality and an extensive sales network, is an ideal partner. Through the acquisition, the Group will cooperate closely with this world-renowned yacht maker, providing Ferretti with new channels to market and capital support as well as other resources with which it can expand more effectively into emerging markets, a key area of potential growth for Ferretti.”
A management realignment made Norberto Ferretti, founder of the Group, honorary chairman and Ferruccio Rossi was promoted to chief executive officer. However no change will be made to the production facilities. Production and management will stay in based in Italy.
Above, Ferrucci Rossi, CEO, and Xu Xinyu, Vice-Chairman, of the Ferretti Group, courtesy of the yard
“The importance of ‘Italian Made’ and the unique heritage of each brand are driving characteristics that underlie every purchase by Ferretti clients around the world and it is therefore essential to protect and nurture this throughout all the shipyards of the Group,” said Tan at the Fort Lauderdale boat show.
Not surprisingly, the Chinese market will be a major focus for the realigned group as well as a continued push into the Americas markets, which saw its biggest year to date in terms of new orders. New dealers in Latin America and on the U.S. coasts will help continue to grow the Ferretti presence.