This Deal Would Create the World’s Largest Bike Company

Apr 11, 2017

The companies behind some of the best-known names in cycling and mountain-biking are in talks to merge in a deal that would create the world's biggest maker of bikes.

Privately-held Pon Holdings and Accell Group, both based in the Netherlands, are hoping to create a group that would have big advantages of scale vis-a-vis suppliers in a market that is booming like never before, but which is still highly fragmented. Together, the two companies sell over 2 million bikes a year, with sales of some $2 billion. That's less than 5% of a global market that was worth $45 billion in 2016, and which is expected to grow to $62 billion by 2024.

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The proposed deal, which would ensure that ownership of the two companies stays in the Netherlands, comes at a time when foreign takeovers are causing concern about job losses among some of the biggest blue-chips among Dutch employers. Unilever, the Anglo-Dutch giant, had to fend off the unwanted advances of Kraft Heinz Foods last month, while Akzo Nobel, a group that makes paints, coatings and chemicals, last month rejected a bid from Pittsburgh-based PPG Industries.

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Neither of the two bike-makers has a high profile outside the Netherlands, but bike enthusiasts would instantly recognise their brands—some of whose models sell at retail for $10,000 or more. Pon, a diversified and privately-held company which only got into the sector in the last few years, owns Cervelo, beloved of triathletes and racing bikers. It also owns Gazelle, Union, and premium mountain bike-maker Santa Cruz. Accell, by contrast, is publicly listed in Amsterdam and is focused purely on bicycles, parts and accessories. Its stable of brands includes Diamondback and Raleigh, Redline, XLC and French-based Lapierre.

Pon said it sees the two companies as an "excellent strategic fit…with sufficient scale to be the long-term winner in the industry."

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Accell's shares have performed well enough in the last couple of years, rising just under 50%, but Pon's offer, which is 23% above the share's all-time high, will be hard to refuse.

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