SRAM To Take Over RockShox
CHICAGO, USA (February 20) – SRAM Corporation is buying the renowned US maker of suspension systems for bicycles, RockShox Inc. Definitive purchasing agreements which include working capital and an anticipated transaction closing date in mid-March, were signed yesterday. The takeover of RockShox follows after two years of financial difficulties for the suspension maker. The difficulties […]
CHICAGO, USA (February 20) – SRAM Corporation is buying the renowned US maker of suspension systems for bicycles, RockShox Inc. Definitive purchasing agreements which include working capital and an anticipated transaction closing date in mid-March, were signed yesterday.
The takeover of RockShox follows after two years of financial difficulties for the suspension maker. The difficulties were caused by industry-wide sales declines and with that a drop in RockShox’s revenues. Net sales decreased 24.5% during a nine months period ending December 31. Revenues dropped from US$ 56 million in 2000 to US$ 42.3 million in 2001. According to a recent Securities and Exchange Commission Report, Rock Shox is in violation of covenants on a US$ 4.1 million bank loan. RockShox’s latest quarterly report indicated that the company was seeking for a US$ 2 million loan from an investor or buyer. RockShox’s financial difficulaties were also caused by a product recall in 2001 and costs associated with a restructuring of the company. All this resulted in a strong drop of RockShox’s listing on the New York Stock Exchange to such an extend that the US suspension maker was forced to leave the Stock Exchange.
The take over transaction is structured as a merger of RockShox with a wholly owned subsidiary of SRAM Corporation in which stockholders of RockShox will receive the cash amount of US$ 0.41 per share. As a result, following the merger, RockShox will operate as a subsidiary of SRAM Corp. According to a RockShox press release, the merger with SRAM Corporation is subject to a number of closing conditions. “The parties expect that, subject primarily the fulfilments of such closing conditions and to the timing of approval by regulatory authorities, the transaction will be completed in late March 2002,” says RockShox.
A SRAM Corporation statement further stipulates that SRAM and RockShox managers will be working on an integration plan that will be completed by June. Aspects of this plan will be presented at a SRAM press conference during this years Taipei International Cycle Show. In the near term, the ongoing introduction of 2003 products, manufacturing, sales and customer service will remain the responsibility of the respective management groups at SRAM and RockShox. Customers could therefore continue to contact the companies separately with respect to these issues.
Stan Day, President and CEO of SRAM Corporation stated, “We have been interested in diversifying our core business into suspension, and the RockShox opportunity fit perfectly with that strategy. The SRAM/RockShox combined entity will enable synergies across the businesses – from sales and marketing benefits to our OEM and Aftermarket customers base, to enhanced and integrated product development. Together, our global strength will enable us to have an even more meaningful presence in the industry.” (JO)