Accell Group N.V. has reached an agreement to acquire Raleigh Cycle Limited, in a deal that would greatly expand its presence in the North American market and the United Kingdom. Accell, which is based in the Netherlands, said it expects Raleigh, which is based in the United Kingdom, to report sales of approximately €200 million in 2012 and EBITDA of approximately 4 percent.
Accell Group values Raleigh at around €76 million ($100 million), including debt. The acquisition price for the Raleigh shares is approximately €60 million. Raleigh’s best known global brands are Raleigh and Diamondback which are complementary to Accell Group’s bicycle brand portfolio. The acquisition enables Accell Group to further strengthen its market positions in North America and the United Kingdom and in addition its sourcing activities in Asia.
Alan Finden – Crofts, Chief Executive Officer of Raleigh Cycle Limited: “I am delighted with the conclusion of the sale of Raleigh to Accell Group. As talks progressed with the various interested parties earlier this year, Accell Group emerged as the clear preferred buyer for the business, given the highly complementary product range and geographic presence of the two businesses. In Raleigh, Accell Group is acquiring a true global brand with 125 years of heritage and distribution into over 140 countries worldwide and I am entirely confident that Raleigh has found the ideal buyer to support
the employees, customers, suppliers and the future growth of the business.”
By acquiring Raleigh, Accell Group expects to realise significant potential synergies in the fields of supply chain, sourcing in Asia, purchasing advantages through economies of scale and intensified distribution of the brands of Accell Group and Raleigh in their respective markets. It will be further investigated where combining Accell Group subsidiaries or activities with Raleigh business units or activities makes sense. Accell Group currently envisages realising annual synergies of €23 million in the course of two years.
Raleigh is characterized by a comparable decentralised business model and its operating companies will continue to operate as independent subsidiaries within Accell Group. Raleigh’s management team is expected to stay after the acquisition; CEO Alan Finden – Crofts will stay at least another 6 months.
Raleigh is a strong and well-known global bicycle brand active in the bicycles market for 125 years. Raleigh’s best known brands are Raleigh, Diamondback and Avenir. The company operates through production and distribution companies in the United Kingdom, the United States and Canada along with worldwide licensing activities and a sourcing company in Asia.
Raleigh operates through five decentralised business units:
- Raleigh US: supply of bicycles and parts & accessories (www.raleigh.usa.com);
- Raleigh UK: supply of bicycles and parts & accessories (www.raleigh.co.uk);
- Raleigh Canada: production and supply of bicycles (www.raleigh-canada.ca);
- Raleigh DTC: sourcing organisation in Asia; and
- Raleigh Licensing: global licensing revenues.
Raleigh employs approximately 430 employees.
Financing of the acquisition
The financing of the acquisition will comprise a term loan facility, as well as an equity offering of less than 10 percent of the issued share capital of the company by means of accelerated bookbuilding.
Details of the Offering
The equity offering will consist of up to 2,000,000 new ordinary shares (less than 10 percent of the issued share capital) with a nominal value of €0.01 each (the “Shares”). The Shares will be offered to institutional and other qualified investors in The Netherlands and certain other jurisdictions through an accelerated bookbuild offering, on a non-pre-emptive basis.
The vast majority of the company’s major shareholders, including ASR, Darlin N.V., Delta Lloyd N.V. and Delta Lloyd Deelnemingen Fonds N.V., have indicated to support the acquisition and to participate in the Offering, at a minimum pro rata to their existing shareholding.
Rabobank International acts as Sole Global Coordinator and Bookrunner for the Offering. Kempen & Co acts as advisor to Accell Group in the context of this Offering. The issue price will be determined by the outcome of an accelerated bookbuild process and will be announced by way of a subsequent press release.
ABN AMRO and Kempen & Co are acting as financial advisors to Accell Group with regard to the
acquisition. Houthoff Buruma is acting as legal advisor to Accell Group.
Trading update Accell Group
Accell Group announces that sales in the first months of 2012 increased, both organically and by
acquisition, as compared to the same period in 2011. The continued strong demand for electrical
bicycles, especially in Germany, played a major role. Sales in both bicycle parts and accessories and fitness equipment increased as well.
The acquisitions of Currie Technologies in the USA and Van Nicholas in the Netherlands have been
completed. As of 1 January 2012 the financial results of both companies are consolidated and
integration of the new subsidiaries is in progress.
Taking into account the normal effects related to the seasonal distribution of sales throughout the year, there were no significant changes in Accell Group’s financial position in the first months of 2012.
Due to temporary delays in deliveries from Shimano, relatively higher sales of last year models and transaction costs for the acquisition the results in the first few months were somewhat lower than last year, but are expected to recover in the coming months. Working capital improved compared to the same period last year.
Based on the developments in the first few months Accell Group reiterates its outlook for the full year 2012, i.e. regarding an increase in turnover and in net operating result (excluding exceptional items).
contribution by Raleigh to the 2012 Accell Group net result is anticipated.
About Accell Group
Accell Group is active internationally in the mid-range and higher segments of the market for bicycles, bicycle parts & accessories and fitness equipment. The provides a broad portfolio of brands, including top international brands and well-known national brands, often with a long history. The company sells primarily via independent bicycle dealers, or IBDs. It best-know brands are Batavus, Koga, Sparta, Winora, Hercules, Hai Bike, Ghost, Lapierre, Atala, Redline, Tunturi and XLC. The company has production facilities in the Netherlands, Germany, France, Hungary and Turkey.
The company recorded sales of €628.5 million in 2011 compared with €577.2 million in 2010 and net profit of €40.3 million, compared with €36.4 million in 2010. Turnover is distributed across the company’s key markets as follows: the Netherlands 34 percent, Germany 28 percent and France 9 percent. Other European countries, including Belgium, Denmark, Finland, Austria, Spain and the UK, account for 20 percent of turnover. The remaining 9 percent of turnover comes from countries outside Europe, including the US and Canada.