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Wiggle to buy online rival Chain Reaction Cycles?

BikeBiz reports that cycling e-commerce giants set to strike deal

The UK’s largest online cycling retailer, Wiggle, is reportedly set to buy its biggest rival, Chain Reaction Cycles, according to trade publication BikeBiz, citing “multiple sources.” Rumours that Wiggle might buy Chain Reaction have been doing the rounds for the past few months, and seemed to firm up significantly at last week's round of UK trade shows.

BikeBiz says that neither business would confirm that a deal was in the pipeline, although it adds that its sources say it is “highly likely” to happen within the next week.

Both retailers were launched in 1999 and have their roots in bike shops with owners who were quick to spot the potential of the internet for cycle retail – Portmouth’s Butlers Cycles in the case of Wiggle and, for Chain Reaction Cycles, Northern Ireland’s Ballynure Cycles.

In 2014, Wiggle had 2014 sales of £167.9 million while turnover at Chain Reaction Cycles was £153.4 million the same year.

Wiggle is majority owned by private equity firm Bridgepoint Capital, which acquired it in a deal worth a reported £180 million in 2011. Since then, there have been periodic rumours of a sale or stockmarket flotation.

There have been reports since then that the private equity firm has been planning a sale of the business or a stockmarket flotation.

Last year, Wiggle moved to a new warehouse facility in Wolverhampton, having outgrown its Portsmouth premises, although its headquarters remain in the Hampshire city.

> Wiggle embarks on big move to Wolverhampton

Chain Reaction Cycles, which sponsors the points jersey at the Aviva Tour of Britain and the An Post Chain Reaction UCI Continental team, remains owned by the Watson family.

> Gallery: Behind the Scenes at Tour of Britain with Chain Reaction Cycles

Would any deal between the two need to be referred to the Competition & Markets Authority? We'd guess not, even the combined 2014 sales come in short of the £295.2 million that we calculate Halfords derived from cycling in the year to March 2015.

That's because while Halfords derives all its sales from the UK and the Republic of Ireland, much of both Wiggle's and Chain Reaction Cycles' sales come from abroad - a reported 40 per cent in the case of the latter.

Halfords says it has a share of between 20 and 25 per cent of the UK cycling market, estimated by Mintel to be worth £1.5 billion.

Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.

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31 comments

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hampstead_bandit | 8 years ago
0 likes

Wiggle "HQ" moving to Ireland to benefit from new tax relief for corporations?

 

CRC and Wiggle kept as seperate entities apart from being owned by same venture capital investors

you don't buy a "brand" (CRC) that has taken years to build, to then shutter it?

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kwi | 8 years ago
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I just hope they keep the show room in Doagh, beyond that, meh.

(Though I am always baffled when a capatilist society wails and gnashes its teeth over the capitalist system.)

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Dnnnnnn replied to kwi | 8 years ago
1 like
kwi wrote:

I just hope they keep the show room in Doagh, beyond that, meh.

(Though I am always baffled when a capatilist society wails and gnashes its teeth over the capitalist system.)

It's not a capitalist society - capitalism is undoubtedly a strong element but it sits alongside Government spending at c.40% of GDP, public sector employment at c.20% of jobs, and large areas of life (health, education, transport, etc.) planned, delivered and paid for through the State.

Cycle (and most other) retailing is clearly much more capitalistic - but it's only a part of what we are, i.e. a mixed-market economy.

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Chapo | 8 years ago
2 likes
Quote:

A combined total of £320 million is now less than  £295 million?

 

The difference is down to my returns & warranty claims enlightened

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Team EPO | 8 years ago
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Interesting Wiggle have bough CRC rather than a bricks retailer like Evans....or is that the next step in market domination!

www.epo.me.uk

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bendertherobot | 8 years ago
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This HQ and Ireland stuff. It's Northern Ireland, yes. So, UK still?

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Bob's Bikes | 8 years ago
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Oh Dear not good news as far as I am concerned, had dealt with both until I had problems returning a light to wiggle they would not refund me the full amount as I had used said light (my reason for return was the beam was to wide for road use) I did ask them how to evaluate a light without switching it on but......

CRC on the otherhand have always been as good as gold and they will (or should that be would?) take returns up to a year after purchase.

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huntswheelers | 8 years ago
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Time to look for decent LBS & Pro Mechanics/Specialists.....   ....being a Mobile Mechanic, I buy a lot of kit in from the EU due to the structure of Distributors etc in the UK.... we'll be doomed if we leave the EU... and Cyclists will have to have deeper pockets... This CRC/Wiggle merger isn't good for anyone apart from private equity firms....  

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usedtobefaster | 8 years ago
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Not good for lack of choice in the market for the buyer.  Couldn't get disc's I wanted from Wiggle but could from CRC - I wonder what will happen to the lines that one stocks and the other doesn't?

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DavidC | 8 years ago
0 likes

Please no.

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DrJDog | 8 years ago
1 like

My source says the deal is done

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sq225917 | 8 years ago
1 like

Private equity firm in tax avoidance based competitor buy out. Not good for choice not good for the economy. Support your local shop.

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Jem PT replied to sq225917 | 8 years ago
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sq225917 wrote:

Private equity firm in tax avoidance based competitor buy out. Not good for choice not good for the economy. Support your local shop.

That is this deal in a nutshell!

I bet the resultant comapny will be based in Ireland rather than Portsmouth!

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rjfrussell | 8 years ago
2 likes

"In 2014, Wiggle had 2014 sales of £167.9 million while turnover at Chain Reaction Cycles was £153.4 million the same year."

"even the combined 2014 sales come in short of the £295.2 million that we calculate Halfords derived from cycling in the year to March 2015."

Eh? What am I missing here?

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Yorkshie Whippet replied to rjfrussell | 8 years ago
1 like
rjfrussell wrote:

"In 2014, Wiggle had 2014 sales of £167.9 million while turnover at Chain Reaction Cycles was £153.4 million the same year."

"even the combined 2014 sales come in short of the £295.2 million that we calculate Halfords derived from cycling in the year to March 2015."

Eh? What am I missing here?

A combined total of £320 million is now less than  £295 million?

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grahamTDF replied to Yorkshie Whippet | 8 years ago
1 like
Yorkshie Whippet wrote:
rjfrussell wrote:

"In 2014, Wiggle had 2014 sales of £167.9 million while turnover at Chain Reaction Cycles was £153.4 million the same year."

"even the combined 2014 sales come in short of the £295.2 million that we calculate Halfords derived from cycling in the year to March 2015."

Eh? What am I missing here?

A combined total of £320 million is now less than  £295 million?

A lot of the £320m is from sales abroard so doesn't count.  As stated in the article.

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CygnusX1 replied to Yorkshie Whippet | 8 years ago
1 like
Yorkshie Whippet wrote:
rjfrussell wrote:

"In 2014, Wiggle had 2014 sales of £167.9 million while turnover at Chain Reaction Cycles was £153.4 million the same year."

"even the combined 2014 sales come in short of the £295.2 million that we calculate Halfords derived from cycling in the year to March 2015."

Eh? What am I missing here?

A combined total of £320 million is now less than  £295 million?

The context was referral to MMC, so it was UK sales turnover - the article stated that up to 40% of Wiggle/CRCs sales are from abroad, whereas Halfords is (almost?) entirely UK based.

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Peowpeowpeowlasers | 8 years ago
1 like

Come on, there are loads of online shops for bike gear.  I've just bought a tool from Clee Cycles that neither Wiggle nor CRC had, and I'd never heard of them before I started looking.

I stopped using CRC a while back anyway because they wouldn't stop sending me spammy emails asking me to review my purchases.  Not even an unsubscribe link.

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andrewthecook | 8 years ago
2 likes

I doubt we're just going to see one big Wiggle and CRC disappear. The value of buying CRC has surely got to be the brand and existing customer base. If you just close CRC and maybe sell Vitus and other CRC names through Wiggle you've got a good chance that customers don't all go to Wiggle bit look elsewhere.
I'd personally be expecting to see two more distinct brands allowing them to be more specialised, but also have lower costs, combined distribution network, and more buying power. There's lots of online competition and people will quickly to keep them honest, but I expect Halfords will really have to up their game to hold onto the market share that Chwiggleaction will surely want a piece of. So looks good to me.

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CygnusX1 replied to andrewthecook | 8 years ago
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andrewthecook wrote:

... but I expect Halfords will really have to up their game to hold onto the market share that Chwiggleaction will surely want a piece of. So looks good to me.

Chwiggleaction.

Catchy. I like it.

Or how about Chain Wi-action Cycles (in best Jonathon Ross impersonation)

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Danger Dicko | 8 years ago
3 likes

I can't believe so many people are crying "monopoly!"

 

If the Gov't didn't intervene when Virgin won both London to Scotland rail routes they'll hardly intervene when one company decides to buy another one in the same market sector.

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Dnnnnnn replied to Danger Dicko | 8 years ago
0 likes
Danger Dicko wrote:

I can't believe so many people are crying "monopoly!"

If the Gov't didn't intervene when Virgin won both London to Scotland rail routes they'll hardly intervene when one company decides to buy another one in the same market sector.

Didn't intervene?! The Gov't deliberately GAVE Virgin won both London to Scotland rail routes!

It's not really the same thing though - rail franchises (like much infrastructure) are mostly natural monoplies, which is why they are tightly-regulated when in private hands.

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darrylxxx | 8 years ago
1 like

I bet they HQ in Northern Ireland which is about to cut its corporation tax rate (to 'compete' with Republic of Ireland)... That's what private equity firms (owners of Wiggle) do.

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HalfWheeler | 8 years ago
0 likes

Two points, good and bad.

Firstly it shows you how well both these companies are doing and by extension how popular cycling is.

However it does mean less competiton. These two are the biggest online retailers for the same reasons; price, availibility, selection and service (relatively).  In my experience if Wiggle didn't have something or it was a bit pricey then I'd usually turn to CRC. If they price match or, eventually, merge then that option will have gone.

 

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londoncommute | 8 years ago
6 likes

On a postive note, it's great to see two UK companies doing so well and exporting so much.

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kenyond | 8 years ago
1 like

Its not going to be a monopoly if wiggle buys CRC there are many other online retails, you can count evans and halfords (even though they have actual stores) theres also PBK (pro bike kit), Ribble, Cycle Surgery, Merlin plus probably many others. If the compitition authority gets in on this with so many other stores why didnt they step in when EE was formed from Orange and Vodafone?

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Jacobi | 8 years ago
0 likes

Good news for the Wiggle owners/shareholders no doubt,  but some-one having a monopoly on Internet cycling retail is not good news for us.

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andyfla | 8 years ago
2 likes

Can't really see the monopolies commision having a problem with it tbh, not exactly a shortage of online bikeshops.

 

I think they wold be silly to get rid of one of the names- better to position one of them in a diff part of the market, or leave it well alone 

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giskard | 8 years ago
5 likes

Not good news, CRC usually stock stuff that Wiggle don't have stock of.  I would've thought the competition commission would be interested in the impact of this deal, seeing as it's not good for the consumer.

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rliu replied to giskard | 8 years ago
1 like
giskard wrote:

Not good news, CRC usually stock stuff that Wiggle don't have stock of.  I would've thought the competition commission would be interested in the impact of this deal, seeing as it's not good for the consumer.

A prerequisite before any investigation is:

either, the business being taken over has a turnover in the UK of at least £70 million; or
the combined businesses supply (or acquire) at least 25 per cent of a particular product or service in the UK (or in a substantial part of the UK), and the merger results in an increase in the share of supply or consumption.

 

Wiggle had a turnover of £140m in 2013 but then I don't think the merged entity would account for 25% of the market given the presence of other online retailers as well as physical shops. GIven how understaffed most government agencies tend to be these days I think they have bigger fish to fry.

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