Dutch conglomerate Pon, which recently bought Derby Cycle, has agreed to ‘a financing arrangement’ with Cervélo and has retained an exclusive option to purchase the Canadian company.
Cervélo announced the agreement late Friday on its website:
Cervélo has entered into a financing arrangement with PON Holdings BV. In addition, Cervélo and PON have signed a Letter of Intent that enables both parties to agree on a sale of Cervélo in exclusivity.
Cervélo representatives were not immediately available Friday evening to comment on the agreement.
Pon recently bought 92 percent of the shares in Derby Cycle Werke, the German company that owns the Raleigh, Univega and Kalkhoff brands, among others, for roughly a quarter billion dollars.
Pon Holdings is an international trading and service company that employs almost 11,000 people at over 250 branches across 12 countries. The company started in the middle of the last century as a bicycle importer and at one point manufactured Pon-branded bikes. Later it expanded into multiple industries, including automotive. Earlier this year it purchased Gazelle, a Dutch bicycle brand.
Cervélo was founded in 1995 by Dutchman Gerard Vroomen and Canadian Phil White. It is based in Toronto.
I wondered why they were offering the $2000 discount. Apparently to bolster the bottom line for a good purchase price. Good for Gerard and Phil getting their golden parachute.
Question is, who will ultimately control design and quality form this point on?
I wondered why they were offering the $2000 discount. Apparently to bolster the bottom line for a good purchase price. Good for Gerard and Phil getting their golden parachute.
Question is, who will ultimately control design and quality form this point on?
The $2K Sale is likely coming too late to impact the purchase price. However, it may have to do with inventory levels and what PON was willing to pony up for. COmplete speculation on my part, though…
I am not so sure how golden the parachute really is.
I think Cervelo has been making bad business decisions for years now and it has finally caught up to them. Making a cool bike does not make you an astute businessman.
They need to make comfort bikes, etc. and to sell them at Wal-Mart for $200 in order to make money. BTW, should have bought Velocity and made fixies only starting in 2003…they could have retired in 2010…
I am not so sure how golden the parachute really is.
I think Cervelo has been making bad business decisions for years now and it has finally caught up to them. Making a cool bike does not make you an astute businessman.
Looks like a fire sale to me.
Seems hard to say. The money they’ve spent on the pro tour team is certainly way out of line for a company their size. But they re-upped for another year (at slightly lower cost) after seeing how expensive the Test Team was. But they sell a lot of expensive bikes and have the name. They could easily drop the pro tour team money and coast for years of high sales.
I am not so sure how golden the parachute really is.
I think Cervelo has been making bad business decisions for years now and it has finally caught up to them. Making a cool bike does not make you an astute businessman.
Looks like a fire sale to me.+1. Could easily be a distress sale. Healthy, well run, companies don’t normally need to offer huge discounts at year end to blow out excess inventory.
I am not so sure how golden the parachute really is.
I think Cervelo has been making bad business decisions for years now and it has finally caught up to them. Making a cool bike does not make you an astute businessman.
Looks like a fire sale to me.+1. Could easily be a distress sale. Healthy, well run, companies don’t normally need to offer huge discounts at year end to blow out excess inventory.
Or poor economy, pricing too expensive, too much supply, not allowing mail order , or a combo of any of the above. Also, cervelo historically offered year end sales at 25% to 30% off for the last several years… which is similar to this percent off.
I am not so sure how golden the parachute really is.
I think Cervelo has been making bad business decisions for years now and it has finally caught up to them. Making a cool bike does not make you an astute businessman.
Looks like a fire sale to me.
THIS!
I’ve been wondering why the $2000 discount right now when two years ago they sold every bike they manufactured at near retail prices. This makes complete sense.
Not to state the obvious, but just because you sell expensive bikes and have high sales doesn’t mean you’re a profitable company…
When it all comes down to it, probably some sort of multiple of EBITDA (and I have absolutely no idea about Cervelo)… maybe they get a bit higher multiple because of the brand… who knows.
I’d be even willing to pay for the roof rack. Seriously though, I’d get the Golf over the A3. I’m more of a VW kind of person. Being associated with anything remotely upscale would conflict with my image of trying to do everything as cheaply as humanly possible (fastest path to retirement and being a full time athlete is buying 10 less cars in one’s lifetime then the neighbour…)
I have no idea as to the financial health of Cervelo. That said, I long ago questioned how they could afford to almost solely fund a professional cycling team that was competing at the highest level of the sport. There is simply no way they sold enough incremental bikes to even brake even, let alone make the investment worthwhile.
We have no idea if the current sale and this agreement are linked, but it does make you go “Hmmmm…”, no doubt about it.
