Accell Group N.V. agreed to acquire Raleigh Cycle Ltd last week in a transformative deal that will increase the Dutch company’s sales by nearly a third and its bicycle sales by 90 percent while giving it a significant presence in the U.S. market.
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 said 48 percent of Raleigh's revenues come from North America, 43 percent from Europe and 9 percent from the rest of the world. Raleigh sold approximately 850,000 bicycles in 2011, mostly under the Raleigh and Diamondback brands. Accell sold 1.1 million bikes last year, but virtually all were sold outside the United States under 13 brands that are largely unknown outside of Europe.
If the deal is approved by German anti-trust authorities, Raleigh’s five operating companies will continue to operate as independent subsidiaries within Accell Group. Accell said it expects Raleigh’s management team to stay on after the acquisition. Raleigh CEO Alan Finden-Crofts is expected to stay on for at least six month.
The deal values Raleigh at around €76 million ($100 million) net of debt. Accell said it would pay approximately €60 million for the company’s shares. Accell expects to cut the combined company’s annual costs by €23 million in the next two years through supply chain and Asian sourcing synergies, increased economies of scale and cross selling of each company’s brands in their respective markets. Excluding transaction costs and on a pro forma basis, Raleigh is expected to immediately contribute to Accell’s earnings per share.
Accell said it expects regulators to sign off on the deal in time for a closing in late May. Accell plans to offer up to 2 million new ordinary shares of its stock, or less than 10 percent of its outstanding shares, to help finance the acquisition.
“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. said René Takens, Accell Group’s CEO. “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.”
Accell Group emerged as the clear preferred buyer at Raleigh, because of its highly complementary product line and presence in Europe, said Raleigh Cycle Limited CEO Alan Finden-Crofts.
“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.”
