HEERENVEEN, Netherlands (BRAIN) — Accell Group N.V. is selling its Hercules bike brand to Germany’s largest retail cooperative, Z.E.G. The acquisition includes transfer of the Hercules brand, corporate premises in Neuhof and working capital to Z.E.G.
The Z.E.G. buying group controls more than $2 billion in purchases and is a powerhouse among German retailers with more than 1,000 members. Z.E.G. has long been closely tied to the Hercules brand as a major customer.
In a statement announcing the sale, Accell said the move will provide more resources for it to invest in its other German brands.
Hercules booked revenue of around 31 million euros and a limited positive operating result in 2013, Accell said.
“The sale of the Hercules brand enables us to increase the focus of our German brand portfolio, consisting of Winora, Ghost and Haibike and to further invest in the distinctiveness of our German brand propositions,” said René Takens, CEO of Accell Group. “The sale of one of our traditional brands, which we have had in our brand portfolio for almost 20 years, was not an easy decision, but I believe that now, more than ever, it is crucial that we make strategic choices and ensure we have a healthy organization fit for the future. We consider Germany as an important market for high-end cycling offering ample growth potential for our group as a whole. It is also a highly competitive market, which requires a strong focus on market positioning or brand and distribution, as well as continued investments in differentiating potential and innovation. Today’s announcement will contribute to that.”
Accell said the sale will result in a profit of 3 million euros for Accell Group, on a consideration of around 20 million euros. The sale is subject to approval and should be completed by the end of February.
Hercules was founded in 1886 and Accell Group acquired the brand in 1995. After several years of organizational changes, a move to Schweinfurt and a repositioning of the brand, Hercules returned to revenue growth in recent years, partly on the back of a strong rise in e-bike sales in Germany, Accell noted. While other Accell Group brands in Germany were recording healthy growth over the last decade, the market positioning of the separate brands gradually became less distinctive.
At the same time, Hercules was booking insufficient growth through the Z.E.G. dealer distribution channel. After a strategic re-evaluation in 2013, Accell Group explored the sale of Hercules and began negotiations with Z.E.G.