In the world of finance, everyone gets to wheel and deal. But only a chosen few get to deal in two-wheelers.
A private equity consortium led by New York-based KKR joined that exclusive club Monday, agreeing to shell out $1.8 billion for Accell, the maker of bicycle brands Sparta, Batavus, and Raleigh. It’s a vote of confidence in a sector that performed well in the pandemic, is poised to do better, and that lends itself to lots of tire-some puns.
European cities spent the last two years adding significant cycling infrastructure so Covid-conscious people can avoid crowded public transportation. Netherlands-based Accell reported a 17% rise in sales to $1.5 billion in 2020 and, last month, said 2021 sales through November were up 4.4% even amid a parts shortage due to global supply chain problems. Accel’s shares have tripled in value since March 2020.
The private equity buyers are paying €58 euros cash for every Accell share, a 26% premium on their Friday closing price. Investors have shown a willingness to pay up as they gear up for a spot in the growing e-bike market, something Accell’s brands are in the race to win. Van Moof, another Dutch bike firm and an e-bike specialist, raised $128 million last year to fund US expansion, but European markets have proven the more attractive bet of late:
- As of October 2021, European venture capital led the world in micromobility deals — startups on the content raised a record $778 million or over a third of global transactions, according to PitchBook data.
- Funding levels for US startups in micromobility — which includes bicycles, e-bikes, and electric scooters — fell to the lowest since 2014, with $335 million invested in a shocking drop from the $3 billion invested in 2018.
Saddle Sores: Outdoor bikes had a much better day than beleaguered Peloton, which is reportedly halting production on some of its exercise bikes and contemplating layoffs. Blackwells Capital, an activist hedge fund with a stake in the struggling indoor exercise bike manufacturer, called Monday for the company to fire CEO John Foley and put itself up for sale.