Raleigh bikes owner agrees €1.56bn deal with KKR-led consortium

One of Europe’s largest bicycle manufacturers and owner of the Raleigh brand has agreed a €1.56 billion takeover by a consortium led by US private equity group KKR as confidence of a lasting boom in cycling grows.

The deal values Netherlands-based Accell Group’s equity at €58 per share, a premium of 26 per cent over Friday’s closing price, triggering a 24 per cent surge in the company’s stock to €57.20 by mid-morning on Monday.

The group’s other well-known brands include Haibike, Ghost, Koga, Sparta and Batavus.

Accell would be better positioned under private ownership for long-term growth as supply chain troubles disrupt the industry amid a pandemic boost to demand for bicycles, Accell and the KKR consortium said in a joint statement.

“The consortium is committed to further developing the Netherlands as the global capital of cycling by building on the company’s leading position in the European e-bike market and continuing to grow its strong heritage brands,” said Daan Knottenbelt, head of Benelux at KKR.

Including net debt, which stood at €79.2 million according to the company’s most recent annual report, the deal gives Accell an enterprise value of about €1.64 billion. This values the company at about 22 times the €74.7 million it made in earnings before interest and tax in 2020.

Consumer sector

The deal adds to KKR’s portfolio of investments in the consumer sector including ride-sharing app Lyft and Indonesian app Gojek, which offers a wide range of services including transport and payments, but it marks the private firm’s first major foray into the bicycle sector.

The acquisition is the latest in the bicycle manufacturing sector after Adidas’s largest shareholder Groupe Bruxelles Lambert took a 60 per cent stake in high-end brand Canyon Bicycles in December, valuing the premium bicycle brand at €800 million.

In 2017, Accell fended off interest from Dutch rival Pon Holdings, deeming its €845 million initial bid and marginally higher subsequent offer as too low. The group slimmed down and narrowed its focus to Europe by selling its lossmaking US business to private equity group Regent in 2019.

Under the deal, Accell’s largest shareholder Teslin will contribute a majority of its shares for a 12 per cent indirect equity stake in the bidding consortium and tender the remainder of its shareholding in the Dutch group.

Accell’s chairman Rob ter Haar said the deal would help the business grow in an “accelerated timeframe” and “strengthen its position as one of the world’s leading bicycle market players”.

Accell’s sales jumped 17 per cent to €1.3 billion and it sold about 900,000 bicycles in 2020, underlining how the industry was one of the big pandemic winners as coronavirus spurred travellers to avoid public transport.

Many of Accell’s brands have been focused on growing in the higher value e-bike market, particularly for e-cargo bikes used to deliver goods.

However, the industry’s newfound success has been derailed by global supply chain problems with lead times from order to delivery for certain parts such as seats and forks extending from the pre-pandemic norm of a few months to beyond a year.

The consortium said it would help Accell deal with the supply chain and inflationary pressures disrupting the industry. – Copyright The Financial Times Limited 2022

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