SEATTLE, WA (BRAIN) Tuesday April 3 2012 4:39 PM MT—The sun never sets on Raleigh, a 125-year-old company with operations across the British Commonwealth and beyond. Thus the sale of a large portion of that empire — Raleigh Cycle Limited — to the Dutch conglomerate Accell Group would be indisputably historic.
But would the sale change the complexion of the North American bike market, the balance of power among the top tier brands internationally and the bike selection on showroom floors? Or would it amount to little more than the exchange of papers in a far off board room?
Depends on who you ask.
The publicly traded Accell announced Tuesday that it was in exclusive negotiations to buy Raleigh Cycle Limited, which includes Raleigh’s operations in the U.S., Canada, and the U.K., Raleigh’s Taiwan trading company, DTC, and Raleigh International, which includes a variety of licensees and distributors.
Accell Group already owns a wide array of bike brands, including Batavus, Koga, Sparta, Winora, Hercules, Hai Bike, Ghost, Lapierre, Atala, Redline, Tunturi and XLC. In North America, it owns the distributor Seattle Bike Supply and most recently acquired e-bike supplier Currie Technologies.
The two companies already have a relationship: DTC represents Accell Group's brands in Taiwan.
Jay Townley, a long-time analyst of the U.S. bike market, said he found the prospect of Accell-Raleigh deal "extremely interesting."
"Strategically, it seems like a smart move on Accell's part, a major aggressive move," Townley told BRAIN. "It gives them control of one of the last of the real iconic names on a global basis."
Townley said the impact would be felt down to the shop level if Accell were to present dealers with a package that includes Raleigh, Avenir, the SBS brands Redline and Torker and Currie's e-bikes. "I think it would give the Accell group a real boost in its U.S. position."
While Townley judges Raleigh as a "second-tier" brand in the U.S. IBD market, it does have some niche strengths, in the urban, retro and commuter markets, where smart spec and style has earned the brand the respect of dealers. And while it's not as well known as Schwinn, the Raleigh brand has a long-term value among Americans.
'No vending machines'
Steve Meineke, president of Raleigh America, cautioned that “it’s the start of a formal due diligence process. There’s no guarantee that it will lead to an acquisition.”
Mienke said it's too early to discuss how Raleigh might work with SBS and Currie. Accell, however, tends to buy companies and then allow them to operate with a significant degree of independence.
“We’re a tightly held company and we’re very supportive of Accell’s approach. I’ve been working closely with Alan (Finden-Crofts, Raleigh's CEO) and our board, and Accell’s board, to move this transaction forward. We view it as a very positive potential opportunity,” he said.
“We see it as an excellent fit between the two businesses both culturally and operationally. I view this as a potentially positive outcome if it all comes together.”
SBS president Chuck Hooper said he expects Accell would continue to allow SBS and Raleigh America to operate as separate companies. "The idea of making a new vending machine for brands is not what is likely to happen," Hooper said Tuesday.
While some synergies are possible, Hooper said SBS and Raleigh are each on solid footing as distinct companies.
"It's not like one of these things they are buying is on its last legs. It's just a good quality investment," he said.
Currie Technologies president Larry Pizzi has similar thoughts. Accell bought the California-based company just three months ago.
"The folks at Accell Group have been talking for a quite sometime about expanding their presence in North America, and they are always looking to grow their business in Western Europe," Pizzi said. "It's pretty exciting stuff. I'm happy to have more sister companies in North America if it comes to that."
Pizzi said he's been in discussion with SBS about sharing warehouse space in the U.S. but there are no plans to merge the companies; in his experience, that's not how Accell operates.
"I think we are used to acquisitions turning into consolidations in the U.S., but that's in contrast to how Accell has operated."