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ASI buys Performance Bicycle

Published August 16, 2016
ASI announces the acquisition to employees Tuesday afternoon.

PHILADELPHIA (BRAIN) — Advanced Sports International has bought the nation’s largest bicycle retailer, Performance Bicycle, including its 106 stores, private-label brands Forte, Spin Doctor, Transit and Scattante, and online businesses Performancebike.com and Nashbar.com.

ASI declined to reveal the purchase price, but the deal had been in the works since ASI learned last November that Performance was on the block.

The move could help ASI compete with rivals Trek, Specialized and Giant, which have opened corporate-owned stores or retail partners. All three have been squeezing out competing brands from retail floors. ASI can now capitalize on Performance’s position as an omnichannel retailer with its strong internet business as well as brick and mortar.

Performance Bicycle’s annual revenue is estimated to be between $275 and $280 million. The Chapel Hill, North Carolina, company employs approximately 2,000 people across its retail and online businesses.

ASI has formed a new U.S. company called Advanced Sports Enterprises. It will oversee both ASI’s wholesale business and Performance’s retail operations, but will treat them as separate companies, said Pat Cunnane, who becomes CEO of ASE and will continue to lead brand development and the wholesale division under the ASI banner.

Performance Bicycle CEO David Pruitt will continue to head up the retailer’s operations. Both companies will retain their headquarters in Philadelphia and Chapel Hill, North Carolina. A management board, consisting of Cunnane, Pruitt, Debbie Chiu, vice president of finance at Advanced Sports, and Karen Bliss, ASI’s vice president of marketing, has been formed to lead the new company. 

“We’re considering a vertically integrated model but not a merged business,” Cunnane told BRAIN on a conference call. “There’s a real distinction.

“The market is changing and where there’s a lot of change there’s opportunity,” Cunnane added. “We see omnichannel as the way to go. Retailers will have to partner with stronger businesses that provide them what they need to compete in an omnichannel world.”

ASI bought the retail chain and internet business from private equity group North Castle Partners, based in Greenwich, Connecticut, which acquired a controlling interest in Performance in 2007.

Garry Snook started Performance in 1981 as a mail-order catalog company, leveraging his and his wife’s savings to launch the business with the mantra of offering great products at great prices. Snook remains a minor shareholder in the company.

ASI secured a $100 million line of credit with Wells Fargo to help finance the buyout. Ideal, Taiwan’s third largest bike manufacturer, has a minority stake in ASI and becomes a shareholder in the new company. Cunnane said the transaction was made with “very minimal debt.”

“We’ve stabilized the business [Performance] financially and they will have the opportunity to grow and make additional investments to further perfect their business,” Cunnane said of the buyout.

ASI, which owns Fuji, SE, Kestrel, Breezer, Phat Cycles and component brand Oval Concepts, sells through 2,000 stocking dealers in the U.S. and now gains Performance’s distribution through its brick-and-mortar and online outlets. Performance also sells complete bikes from Ridley, GT, Charge, Diamondback and Schwinn, and, for the time being, will continue to carry those bike brands.

“We expect Performance will sell more of our brands, but they will not be an ASI store,” Cunnane said. “Performance stores will sell other brands.”

“Competitive differentiation is absolutely critical given the historic shift we’re seeing in consumer buying behavior and the retail landscape as a whole,” said Performance CEO Pruitt. “This new business model will provide tangible benefits for both companies and will fuel the next round of growth for Performance. This will be great for our associates, our vendor partners and our customers. We’re very excited to move forward under this new structure.”

 

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