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Wiggle and Chain Reaction Cycles confirm merger

Online giants with £300m+ turnover join forces

Wiggle and Chain Reaction Cycles have confirmed that they are to merge, creating an online cycling retail business with combined annual sales of more than £300 million.

Rumours that the UK's two leading cycling e-commerce sites were planning to join forces broke on Wednesday.

According to a joint statement from the companies, "the transaction is subject to a number of regulatory approvals, including merger control clearance from the Competition and Markets Authority (CMA)."

Given that a high proportion of the turnover of both companies is derived outside the UK, where Halfords will remain market leader (it estimates it has between 20 and 25 per cent share) that should prove a formality.

Wiggle CEO Stefan Barden said: “In the global online retailing market in which we operate, there is a compelling industrial logic for our two businesses to come together to become a stronger force.

"We have long respected Chain Reaction Cycles as a business and share its values and commitment to delivering the best possible price and first class service for its customers. Like us they have a deep seated love of cycling.

"The combined business will offer all customers an extended range of brands and products, with Wiggle’s strength in tri-sports and road cycling complemented by Chain Reaction Cycles’ strength in mountain biking, BMX and road cycling too.

"The deal propels Wiggle faster towards its objective of building a global online champion and a major British export success story.”

Managing director of Chain Reaction Cycles, Chris Watson, said: “This is an exciting new chapter for the Chain Reaction Cycles brand.

"Since the business started in 1984, we’ve grown strongly from our mountain bike origins in Northern Ireland to meet the needs of more MTB, BMX and road cyclists across more countries.

"Coming together with Wiggle is a great way to continue that growth, as a global force in cycling and a leader in technology, eCommerce and innovation.”

Both businesses have their roots in local bike shops whose owners were quick to spot the opportunities offered by online, each launching their internet operations in 1999.

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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17 comments

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hampstead_bandit | 8 years ago
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Perhaps wiggle HQ moving to Ireland to enjoy new corporate tax relief being introduced. Sales processed 'offshore' to minimise tax.

Could certainly make the venture more profitable than the current 4% rumoured operating margin.

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nmanfield | 8 years ago
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Use both CRC and Wiggle over here in Switzerland.  Been very happy with service from both, but Wiggle has free shipping here from 10 quid - this means that i can have stuff sent here for free and as long as it is under 45 quid i dont need to pay customs charges.  Really hope that this doesnt change as buying things locally can work out as very expensive.

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kwi | 8 years ago
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2 Show rooms and 2 warehouses in Northern Ireland now under threat.  Employment in NI has taken a battering recently, JTI pulling out of the Gallaghers plant, Michilin Tyres pulling out of the Raceview plant, 1/2 the B&Qs closing, the recent review of public administration leading to a lot of council jobs going. 

Just hope that Stormont try to secure some of these jobs, mind you they probably won't even notice.

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Tojo | 8 years ago
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Never mind about the Haribos what will happen to the personal discount that Wiggle have, will they still honour that, after all the coustom I have given them I certainly hope so....frown

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matthewn5 | 8 years ago
1 like

I'm surprised that the Competition and Markets Authority isn't taking an interest in this deal.

That said, their prices have been aligned to the nearest penny for years, so it's hard to see much change.

I will miss the ability to shop around online.

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Cumisky replied to matthewn5 | 8 years ago
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matthewn5 wrote:

I'm surprised that the Competition and Markets Authority isn't taking an interest in this deal.

That said, their prices have been aligned to the nearest penny for years, so it's hard to see much change.

I will miss the ability to shop around online.

As it says in the article, they are still a minnow compared to the like of Halfords, plus a large part of their market share is overseas.

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wycombewheeler replied to Cumisky | 8 years ago
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Cumisky wrote:

As it says in the article, they are still a minnow compared to the like of Halfords, plus a large part of their market share is overseas.

different market, one sells quality bike components accessories and clothing to keen cyclists, the other sells BSOs and parts to people who don't know better.

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Dr_Lex replied to matthewn5 | 8 years ago
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matthewn5 wrote:

I'm surprised that the Competition and Markets Authority isn't taking an interest in this deal.

[...]

 

I assume that you missed the third paragraph of the article:

article wrote:

According to a joint statement from the companies, "the transaction is subject to a number of regulatory approvals, including merger control clearance from the Competition and Markets Authority (CMA)."

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patto583 | 8 years ago
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Halfords' market share of 25% would drop significantly if it were only classed as being in the same market on items of comparable quality. A large proportion of Halfords cycling sales are the ubiquitous "BSO" in more direct competition with Tesco than either of these two.

Not that that will make any difference, someone in the CMA probably went to school with one of the lawyers negotiating this deal and someone in a related post in government, so it will all go through without a hitch. 

On a more serious note, I can't see the independence of the two surviving for long, so what do they hope to achieve in the long run, or are they just after a quick profit? Once their prices stop being competitive with each other one of their competitors will get a bigger market share, and thus more buying power, thus lower prices, then they will replace the competitor they just bought out of the market. Smacks to me of capitalism for capitalisms sake rather than for any reason of improved service or quality.

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Dr_Lex replied to patto583 | 8 years ago
1 like
patto583 wrote:

[...]

On a more serious note, I can't see the independence of the two surviving for long, so what do they hope to achieve in the long run, or are they just after a quick profit? 

[...]

I doubt it would be quick, but  I'm sure the reason is increased profit from the ultimately reduced costs of a combined operation. Wiggle, owned by venture capitalist Bridgepoint since 2011, can use the spare capacity of their vast distribution centre in Wolverhampton, to which they moved last Autumn. 

Expect a flotation of Wiggle in a year or two. 

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J90 | 8 years ago
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Another site said it was a takeover by Wiggle, I knew they were big but surely they're not that big? CRC are a pretty big company to just takeover. A merger sounds more realistic.
I hope they keep CRC's free delivery policy.
I don't see much difference in pricing in the future, they still have a decent amount of competition.

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EddyBerckx | 8 years ago
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At the end of the day they both give amazing customer service - always highlighted when you shop non cycling online shops...I do share people's concerns but maybe they've earned the benefit of the doubt?

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chaos | 8 years ago
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Ater years and years of endlessly shopping around I decided to simplify my life and just use x3 sellers. I am now down to x2. Life has just started to get more complicated again!

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giskard | 8 years ago
3 likes

Besides the impact on pricing competition, let's hope it doesn't mean job losses.

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Digy46 replied to giskard | 8 years ago
1 like
giskard wrote:

Besides the impact on pricing competition, let's hope it doesn't mean job losses.

 

There's no reason for CRC to be based in Norhern Ireland other than that is where the founders come from. Like many in the cycling industry these two companies have wonderful revenues and lousy profit margins. The fastest way to improve those margins is to move them both together at Wiggle's new facility . I fear for the job prospects of my fellow Northern Irelanders

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DaveE128 | 8 years ago
2 likes

I use both of these two regularly. That has got to be bad news. At the moment pricing competition between the two keeps prices significantly lower than other retailers in many cases.

I foresee prices increasing significantly.  2

This is probably good news for all other retailers.

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nortonpdj replied to DaveE128 | 8 years ago
3 likes
DaveE128 wrote:

I use both of these two regularly. That has got to be bad news. At the moment pricing competition between the two keeps prices significantly lower than other retailers in many cases.

I foresee prices increasing significantly.  2

This is probably good news for all other retailers.

 

Let's hope it's good news for your LBS!

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