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.  


Raleigh's revenues are split between Europe (43 percent), North America (48 percent) and the rest of the world (9 percent). Across the globe, Raleigh sold approximately 850,000 bicycles in 2011. In conjunction with the deal Accell Group announced it would offer up to 2,000,000 new ordinary shares, which is less than 10 percent of Accell Group’s issued share capital.

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.




The  closing  of  the  acquisition  is  subject  to  approval  of  the  German  competition  authorities  and  is expected to occur at the end of May 2012. Excluding transaction costs and on a pro forma basis, it is expected  that  the  acquisition   will  immediately  contribute  to   Accell   Group’s  earnings per share.


 

“We are very pleased with the acquisition of  Raleigh,  another milestone  for  our  company,” said René Takens, Accell Group’s CEO.  “Acquiring  Raleigh  adds  a  strong  traditional  and global   brand   with   a  rich  heritage   to  our  brand  portfolio   and   with   the   Diamondback  brand   we strengthen  our  position  in  the  mountain  bike  and  BMX  segment. 

 

“We  also  strengthen  our  position  in bicycle  parts  &  accessories  in  North  America  and  the  United  Kingdom  improving  Accell  Group’s global  competitiveness  in  this  field,” Takens continued.  “The acquisition  will  expand  our  activities  to  new  geographical markets while benefiting from purchasing advantages through increased economies of scale. We have great confidence in Raleigh’s management team and will fully support future growth of Raleigh within our group.”

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 €2–3 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


Accell Group intends to finance the acquisition with a combination of debt and equity financing. The company  has  secured  debt  financing  with  Rabobank  to  finance  the  full  acquisition  price  and  related transaction costs.

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).


Due  to  the  timing  of  the  Raleigh  acquisition  and  the  related  one-off  transaction  costs,  no  significant
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.


Accell Group shares are traded on the official market of the NYSE Euronext in Amsterdam and included in the Amsterdam Small Cap Index (AScX).