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Garmin in talks to buy Britain’s Raymarine

I know these rumours have been going on for some time – see my post last year – when Raymarines share price started moving…well checkout this Reuters article by by Purwa Naveen Raman and Savio D’Souza

…”Raymarine, which makes fishfinders, autopilots, marine radar and GPS systems for leisure boats, and rivals like Garmin and Norway’s privately held Navico are struggling to chart a course in a weak economy that has crimped demand for discretionary consumer goods they offer. “Raymarine gives Garmin the all-important original equipment manufacturer (OEM) footprint,” Panmure Gordon analyst Oliver Wynne-James said upgrading Raymarine’s stock to “buy” from “hold.”….

There is also a good article by Edmond Jackson at Interactive Investor here …

…”Relative to a share price of about 17p, which capitalises Raymarine equity near £14 million relative to £96 million net debt, the challenge is guessing what Garmin could pay. It is in a comfortable position with $959 million cash at end-June although it will be hard for Garmin executives to determine a worthwhile price to pay since a significant restructuring would likely be needed to integrate Raymarine.

Raymarine became over-stretched at the top of the economic cycle, assuming too much debt to acquire overseas distributors as a means to sustain earnings growth. After 500p in 2007, the shares collapsed from about 350p last year to just below 10p, with management recently admitting it is close to breaching bank covenants.

Ironically, the board has continued to assert that buying distributorships has been the correct strategy – despite the fact that the debit involved has destroyed shareholder value. Although other acquirers could become interested should Raymarine’s bankers appoint administrators, it looks as if Garmin is the only one currently capable of taking on the entire group.”…

You should have bought Raymarine shares last year instead of buying that new AIS 🙂


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