Accell Group’s Sale of US Activities Welcomed by Financial Markets and Analysts
HEERENVEEN, the Netherlands – Financial markets as well as analysts are responding to the yesterday announced sale of its U.S. activities by Accell Group as ‘good news’. They are glad that Europe’s biggest in e-bikes has been able to get rid of its troublesome subsidiary that showed rapidly growing losses. Accell share rating on the Amsterdam Euronext stock exchange upped about seven percent yesterday.
The day before yesterday, August 6, Accell Group NV transferred its American activities (Accell North America – ANA) for 1 US dollar to the private equity firm Regent LP. This investor took over Mavic last month. Regent aims to develop Mavic into “A premium full cycling brand globally.”
The 1 dollar takeover sum that Regent paid for ANA can, subject to conditions, amount to a potential earn out of USD 15 million, depending on future sales performance. Next to the sale of its loss making U.S. business, which included the worldwide registrations of the brands Diamondback, Redline and IZIP; Accell and Regent also agreed on an exclusive 2-year US distribution partnership for the international Accell brands Raleigh, Haibike and Ghost. The potential benefit of the earn out arrangement are to come in the 2022 – 2026 period.
The deal has a one-off negative impact on Accell’s gross profit (EBIT) of 46 million euro booked in the second half of the year. In addition, it costs the company another 10 million euro in cash.
Dutch financial analyst Bank Degroof Petercam commented on Accell Group’s ANA sales announcement with “The impact on the company’s gross profit is considerable. However, this does not apply to the cash position.” With that the consequences are, according to the experts, limited. Bank Degroof Petercam uses hold advice on Accell shares.
‘Eliminate profit dilution’
Accell Group CEO Ton Anbeek said “With this announcement, we have completed the strategic review of our North American business. This allows us to eliminate the profit dilution, while we can continue to distribute our global brands to the U.S. and benefit from the growing demand for e-bikes. We look forward to working with Regent as our US distributor and as global supplier of its sports brand Mavic.
“The completion of the strategic review results in a one-off charge which we will absorb in H2 2019. We are glad that we can now put our full focus on accelerating growth of our European core business.”