On Monday February 4, 2008 the Canadian firm Dorel Industries Ltd. announced it has acquired the Cannondale Bicycle Corporation. Dorel also own Pacific Cycles the parent company for Schwinn, GT and Mongoose. Dorel plans to create a new division within its company to focus on the Independent Bicycle Dealers, the Cannondale Sports Group.
At first glance you might say this is a bad thing for Cannondale. You might ask, ‘how long before we see a Cannondale bike at Costco, Target or worse WalMart?’ But is it really. I have been involved with several mergers and acquisitions and there is considerable upside for Cannondale in this.
Cannondale was bought by Pegasus Capital Advisors after its founder nearly bankrupted the company with a venture into motorcycles. Please note that PCA was and is an investment firm. They have no history in cycling or manufacturing. They exist to take undervalued companies and shoot a little capital into them and then reap big rewards by either selling them piece by piece or whole. Pegasus did just that. Dorel has some history with cycling but no real expertise outside of mass marketers, so in order to penetrate the IBD market they needed to buy their way in. Cannondale fit the bill.
According to the announcement call, which I did listen to, the few analysts there seemed happy with the acquisition. It brings in a boatload of resources to Cannondale’s disposal, and they get to keep much of their management team intact. I do believe we are about to see some great things from Cannondale in the future, they are currently the #3 bike maker and want to move up (Trek and Specialized are #1 and #2 respectively).
I did speak to one of the largest Cannondale dealers in the nation last month and he told me some very good things about what Cannondale is planning for 2009/2010. I can’t wait to see them come to fruition.
Tags: Cannondale, Dorel
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I’ve recently purchased a new Cannondale from the 2009 range. In brief I’m very pleased. I used to ride the Cannondale 800 which was an excellent bike and delivered both great versatility and a top-end riding experience.
I don’t think the ownership of the company is likely to impact the quality or brand of the product, particularly if the management have got any sense. They must be acutely aware in this industry, customer loyalty and feedback, is ‘number one’, and I would imagine they don’t want to impact this in anyway.
I expect overtime the management team will wish to implement their own business strategies, at which point it’s difficult to tell what may happen to quality. Fingers crossed that the attitude from the top, is very much “leave the quality production and marketing to the experts” while we take on the number 1 and 2 brands!
Time will tell.
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That would be very nice! I hope I can do that too.. I wanna join that club..
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