Irwin Jacobs eyeing bid for Genmar

Minneapolis, MN -- Legendary Minnesota financier Irwin Jacobs, who once made a small fortune grabbing up distressed companies, may be looking to make a bid on his own troubled recreational boat company.

Jacobs is stepping down as CEO and board member of Genmar Holdings, an umbrella corporation for 14 different brands of boats, which filed for Chapter 11 bankruptcy protection last June. That will technically free Jacobs to bid for the company's assets when the bankruptcy court auctions them off at a later point.

"This removes the conflict of interest for him as an insider," Mark Sheffert of Manchester Companies told KARE on Tuesday, "Whether he actually makes a bid or not."

Manchester is the company hired by the bankruptcy court to manage Genmar through the restructuring process. Sheffert said it's rare, but not completely unheard of, for an insider in a sidelined company to buy it at auction. He said the lowest acceptable bid hasn't been determined yet.

"We wanted to make the announcement that Irwin was leaving the post, because he had been quoted by reporters as saying he wanted to buy the company."

Sources say Jacobs owns roughly 40 percent of Genmar, which he launched in 1978 with the purchase of Lund Boat Company. In a 1991 interview with former KARE 11 personality Pat Miles, Jacobs said Genmar gave him a special sense of accomplishment.

"We built this from nothing," he told Miles, "I mean this is the first thing in my life I built literally from the ground up. I started with just little Larson Boats in Little Falls and now we have 14 companies around the world."

Genmar had sales of $1 billion at its peak in 2006, but that figure had fallen off to $460 million by the time Genmar sought protection, citing a downturn in recreational and luxury boating markets due the recession.

Professor George John, who heads the marketing department at the Carlson School of Management at the University of Minnesota, said the Jacobs name could be valuable if Genmar were seeking investors. However, from the standpoint of generating revenue from sales, the name wouldn't necessarily be a factor.

"In this particular instance there are so many different brand names of boats," John told KARE, "Even if you roll up a bunch of brand names into one big company to achieve savings or synergy you still have to sell one brand, one boat at a time."

He said when it comes time to sell Genmar's assets the bankruptcy judge in the case will make the decision that's best overall, for the restructured company and its thousands of creditors.

"In my mind there's still a market for these boats," John said, "We'll come out of this recession, and they have products that cover the range from little runabouts to big yachts."

He added, "Those markets are going to be there, and somebody's going to make money off it. The question is who and how much?"

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