Fox Factory Holding Corp. (Nasdaq:FOXF) has agreed to acquire certain assets of Marzocchi in a deal that will save the Italian motorcycle and mountain bike brand from extinction.
While Fox Factory did not disclose financial details of the transaction, CEO Larry L. Enterline said the company expects to grow Marzocchi, which had been slated for liquidation by its parent company Tenneco Inc. in late July. Prior to that, Marzocchi had competed against Fox to sell suspension products for motorcycles and mountain bikes to both OEMs and in the aftermarket.
“We believe [Marzocchi] is a significant opportunity for Fox to further expand the penetration of our bike suspension products across more price points,” Enterline said. “The Marzocchi team has a long history of performance suspension experience and we believe that this highly complementary transaction will allow for the increased growth of the Marzocchi brand worldwide. We expect this transaction will bring together and strengthen two highly complementary product lines and allow for Fox to leverage its marketing, engineering, distribution, and supply chain resources to drive increased top-line growth and profitability.”
Fox Factory expects the transaction to close in the fourth quarter of 2015 subject to customary closing conditions. Marzocchi is not expected to have a material impact on the company’s financial results in 2015 or 2016.
Tenneco Inc. reported Friday that it took a $25 million charge in the third quarter to close and liquidate Marzocchi. Tenneco has said it expected the divestiture to save it $7 million annually beginning next year.
Fox Factory expects to provide additional details on the deal in early November, when it reports its fiscal third quarter earnings results. The deal comes as the Scotts Valley, CA-based company prepares to ship it first forks for mountain bikes that will retail for less than $2,000.
Fox Factory reported sales increased 12.5 percent to $306.7 million last year due primarily to the acquisition of a company that makes suspension products for off-road trucks. Sales of the company's bicycle products, however, dipped 1 percent after years of double digit growth due in part to increasing competition from lower priced competitors.
Fox Factory reported bike sales surged 23.9 percent in the second quarter due largely to revenues from Race Face and Easton Cycling, two wheel and non-suspension component brands acquired in December 2014. While OEM orders for suspension products for model year 2016 mountain bikes grew, Enterline said he remained cautious about model year 2015 bikes equipped with Fox forks and shocks selling through.
