Giant bids to buy assets of bankrupt power meter brand Stages for $20 million

A subsidiary of Giant has made an initial $20 million bid for the assets of Stages after the power meter brand ceased operations and laid off all its staff earlier this year.

Bicycle Retailer and Industry News reports Spia Cycling, a subsidiary of Giant, has made a stalking horse bid — an initial bid for a bankrupt company's assets arranged to prevent other interested parties underbidding, in effect setting a low-limit.

Any rivals to Spia's $20 million bid will have to place a minimum $21.5 million competing bid as well as stump up for a $500,000 minimum overbid charge and a break-up fee, with the final bidding procedure to be confirmed following a meeting on July 15, the proposed deadline for bids currently August 1.

Giant showed interest in purchasing a one-third share in Stages last year, the bike manufacturer's board approving a bid of around $20 million, although negotiations fell through. 

In April, Stages ceased operations and laid off all staff, as UK consumers were reassured that warranty claims would be covered by its distributor Saddleback.

Stages initially stopped supplying orders to suppliers and then ceased shipping to customers, the brand's website showing most products as being unavailable, although various models were still in stock at Saddleback.

Then it emerged that Giant was suing the power meter brand over unpaid invoices and already manufactured products. Giant manufactured Stages products and filed a lawsuit citing £11 million in unpaid invoices and already manufactured products valued at £5.4 million.

At the same time it was revealed that four former top executives from Stages had also joined the Taiwanese bicycle manufacturing giant, including Pat Warner, who served as Stages' senior vice president of product research and joined Giant as vice president of product R&D.

> Giant sales down 20% and profits slashed by 38% as bike industry challenges continue

Likewise, Paddy Murray, former vice president of Stages' global marketing is now Giant's VP of global sales and marketing.

The total amount of the invoice is reported to be NT$454 million, or £11.1 million, and is attributed for power meters, exercise bikes, other products and parts, and storage and shipping fees. The complaint says that Giant also has produced and is storing products that Stages ordered valued at another £5.4 million.

Three months on, bankruptcy attorney Patrick Patino has appealed for several motions to be approved, with one to allow continuation of payments necessary to operate Stages' cloud-based training software as it is still accessible by users even if other operations have ceased. The attorney argues the value of assets would be diminished if it shut down.