Amer Sports is currently exploring a sale of its cycling business Mavic. The Finland-based business, which owns the Wilson, Salomon, Atomic, Precor and Suunto brands, also lowered its outlook for the current year while unveiling a €150 million ($215 million) rights issue to bolster its balance sheet.
Regarding Mavic, Amer said in a statement that it is “considering strategic alternatives to focus its business portfolio more towards categories where it believes it has the best long-term opportunities…”
On a conference call with analysts, company President and CEO Roger Talermo said part of the decision to explore a sale of Mavic is because the company liked to invest in “bigger entities.”
In a particular category, he noted, “you don't need to be number one, but you need to be within the three best and you need to have a target to be at least the most profitable one.” He also noted if a brand can't develop profitably organically or through mergers, the brand is likely to lose its position when a market consolidates. “We still believe that to be a very strong player in the mid- to long-term, you have to have a portfolio, because the sports are seasonally bound and you need to create an all year round activity,” he said.
Regarding the lowered guidance, Amer said the current consensus estimate for the FYO9 EBIT of approximately €60 million was “too optimistic.” The company noted that in releasing second-quarter earnings on August 6, it had only predicted that earnings would decline. It said it couldn't be more specific given the “prevailing uncertainty in the macroeconomic environment and the significance of the last quarter of the year to the company's results.”
The Finnish company finally said it was launching the €150 million ($215 million) rights issue. The issue, led by J.P. Morgan and Pohjola, is fully underwritten. Proceeds will be used to strengthen its financial position and to improve the company's operational and strategic flexibility.
