Brunswick Corporation announced that its board of directors has authorized proceeding with a spin-off of its Fitness business.

The Fitness segment is led by Life Fitness, Hammer Strength, Cybex, Indoor Cycling Group and SCIFIT. The spinoff will also include the Brunswick Billiards business.

The spinoff’s reasons included:

  • Consistent with the company’s proven track record of regularly assessing its portfolio and strategy to ensure the company is best positioned to deliver long-term shareholder value
  • Capitalizes on the leadership positions of Marine and Fitness to establish two focused companies, each well-positioned with enhanced strategic opportunities and flexibility to drive growth
  • Allows shareholders to value and invest in two different and compelling investment opportunities based on each company’s market, competitive, operational and financial characteristics
  • Also drives value for customers, employees and other key stakeholders

Following the spin-off, Brunswick, comprised of the Marine Engine and Boat segments, will remain a global leader in recreational marine products. The Marine Engine segment, which consists of Mercury Marine, manufactures and distributes a broad range of marine propulsion systems and related parts and accessories. The Boat segment manufactures and distributes a range of recreational boats under 14 boat brand names including Boston Whaler, Bayliner, Lund, Lowe, Harris and others. These businesses generated approximately $3.5 billion in sales in 2017.  The Brunswick marine portfolio will continue to deliver unique technology and solutions to boaters worldwide. Brunswick chairman and CEO Mark Schwabero will continue to lead Brunswick following the spin-off.

The company will remain headquartered in Mettawa, Illinois, and will continue to trade on the New York Stock Exchange under the ticker symbol BC.

FitnessCo (which will be formally named at a later date) will remain headquartered in Rosemont, IL. Jaime Irick, current president of the company`s Fitness division, will lead FitnessCo upon completion of the transaction

As an independent company, FitnessCo will be able to focus more sharply on driving product leadership, operational excellence and technology development to address evolving commercial fitness marketplace trends.

Key enablers for the Fitness segment included:

  • Largest global footprint of any commercial fitness equipment manufacturer
  • Strong brand profile and broadest product mix
  • Technology leadership
  • Capitalizing on positive industry fundamentals
  • Expansive global customer relationships

FitnessCo sales revenue was $1.03 billion in 2017 with operating margins of 10.7 percent. For 2018, FitnessCois is targeting operating margins consistent with 2017 levels.

“FitnessCo will be positioned to continue to grow, innovate and provide customers with high-quality solutions while also ensuring that the Marine business is best positioned to continue creating value for our shareholders,” said Brunswick Chairman and chief executive officer Mark D. Schwabero. “We are pleased to have built two well-established businesses that are clear leaders in their respective industries, and both will benefit from greater focus and dedicated leadership with each pursuing distinct strategic plans that will drive targeted investment, attractive growth and shareholder returns.”

The Brunswick Board of Directors authorized members of its Executive Committee to oversee the transaction process. The proposed transaction is anticipated to be tax-free to Brunswick shareholders for U.S. federal income tax purposes. Details of the distribution will be included in a Form 10 registration statement filed with the Securities and Exchange Commission at a later date. The proposed transaction is projected to be complete by the end of Q1 2019, subject to final approval from Brunswick`s Board and other customary conditions.

Photo courtesy Life Fitness