Wiggle aquire Chainreaction and Bike24

godtabh

mossym wrote: »

why do people think CRC is going away? i'd say nothing will change, just the owners. it's a well established brand, with a huge customer base. even if this merger does go ahead, i imagine it will be business as usual.

The brand might not change but what it sells and at what price may. A merger like this generally isnt good for the consumer. Wiggle CRC may benefit form a greater buyer power but it remains to be seen if this will be passed on to customers.

At the end of the day there are plenty of other places to buy from so I'm not worried.

OleRodrigo

It depends on how many customers are walk-in, or are web based. If the majority are web based, then it doesn't matter where the warehouse is so Wiggle could subsume it into their existing business.

They could potentially save a fortune by combining warehouse and internet operations, which is bad news for local employment.

Eamonnator

C.R.C. currently have about 500 employees.
I hope their jobs are secure.

smacl

Beasty wrote: »

I've a "casual" membership of British Cycling which gives me 10% off CRC (even when already discounted). I get a minimum 12% off Wiggle with my platinum discount. I find I can usually get a lot of (particularly routine) stuff from one or other as cheap if not cheaper than on the continent.

You're clearly a customer worth fighting for. Maybe if you took your business elsewhere the pair of them would collapse :pac:

Macy0161

I don't really find much price difference between the two - more price matching than undercutting.

Normally just go for CRC for island of Ireland reasons, but the last few orders swimcyclerun has beat them both for price, and it is actually next day delivery every time for me (unlike CRC's premium delivery which continues to be hit and miss for me), and it's free delivery.

Have to agree though - the consumer rarely benefits in such circumstances. Wiggle do a fair amount of UK sponsorship though, don't they, so doesn't necessarily mean the end of that if CRC is taken over.

mossym

has it been clearly said that this is a merger? Everyone seems to be assuming they'll merge into one entity. Wiggle may be very impressed with the business model/books of CRC and this is an acquisition to take ownership of the revenue stream, whereby they will leave the company as is. half the cycling world is owned by the same few small companies who maintain very different brands, no reason the resellers should be any different.

of course they leverage economies of scale if they merge IT/distribution systems. of course they get more buying power if they combine. but there is plenty of histories of M&A where this hasn't happened, (
Sunday Business show this week was talking about Van Heusen, who own Calvin Klein and Tommy Hilfiger among many others. They still haven't moved all these brands to one IT/accounting system, and they all operate separately, although it's claimed it will happen in 2016 ) so until it goes ahead it's only guesswork.

Beasty

mossym wrote: »

has it been clearly said that this is a merger?

Even if they retain the 2 brands there is nothing to stop them running both from a single entity (limited company), and there are certainly some economies of doing so.

There is though one potentially significant benefit of retaining CRC as a separate legal entity run out of NI (and indeed Wiggle transferring it's own activities to NI) - that's the proposal for NI to reduce its corporation tax rate to match the Irish rate

OleRodrigo

From Bridgepoint Capital, who own Wiggle:

Bridgepoint seeks to acquire companies with strong market positions and earnings growth potential where significant additional value can be created through expansion and operational improvement.

http://www.bridgepoint.eu/en/what-we-do/

Doesn't look much like a casual acquisition

mossym

Beasty wrote: »

There is though one potentially significant benefit of retaining CRC as a separate legal entity run out of NI (and indeed Wiggle transferring it's own activities to NI) - that's the proposal for NI to reduce its corporation tax rate to match the Irish rate

indeed, look at Tyco naming Cork as HQ for it's new organisation. although i'm sure that's for the beamish.

seamus

Beasty wrote: »

Even if they retain the 2 brands there is nothing to stop them running both from a single entity (limited company), and there are certainly some economies of doing so.

There is though one potentially significant benefit of retaining CRC as a separate legal entity run out of NI (and indeed Wiggle transferring it's own activities to NI) - that's the proposal for NI to reduce its corporation tax rate to match the Irish rate

There's a lot of strategic advantage in having another distribution centre too.

They sell worldwide but distribute from the UK. If they're planning to expand their distribution locations, it would make sense to start by acquiring someone like CRC who are already established and are in the same jurisdiction.
So merging is far easier, then say acquiring a business in Australia.

ILIKEFOOD

Eamonnator wrote: »

I hope, the dentist doesn't have to do any wiggling.

seems to be legit

dogsears

A transaction like this is most likely going to be subject to Competition Authority approval before being final so there could be a couple of months delay between now and completion.

I believe there is concern locally about potential for job losses arising out of efficiencies that can be made e.g. they won't need 2 IT depts etc, even if they do maintain separate brands, so the potential lower corporation tax rate for NI could be a very significant factor in this.

Jim Stynes

Disappointed to hear that wiggle have bought Chainreaction cycles. Rumours are they have bought some warehouse in Birmingham that is 3 times the size of CRC's. Hopefully this doesn't mean job losses and stores closing over here. Plus the price of things will no doubt increase.

dastardly00

There is a thread here already Jim:
http://touch.boards.ie/thread/2057559339

Jim Stynes

Oh sorry lads. Had a look and missed it somehow.

ted1

dogsears wrote: »

A transaction like this is most likely going to be subject to Competition Authority approval before being final so there could be a couple of months delay between now and completion.

I believe there is concern locally about potential for job losses arising out of efficiencies that can be made e.g. they won't need 2 IT depts etc, even if they do maintain separate brands, so the potential lower corporation tax rate for NI could be a very significant factor in this.

Corporation tax only needs 1 man in a office , the warehouse can still go . Say good bye to free deliveries for items over €9

C3PO

ted1 wrote: »

Say good bye to free deliveries for items over €9

Over the last few years I've increasingly bought from the German sites only really using CRC for smaller (free delivery) and urgent purchases. Their pricing is no longer competitive with the Germans. With this merger I suspect that gap will grow as Wiggle try to recoup what will be a major investment!
Like other posters I would worry for all the local racing that CRC support.

Beasty

Threads merged

Kaisr Sose

Beasty wrote: »

There is though one potentially significant benefit of retaining CRC as a separate legal entity run out of NI (and indeed Wiggle transferring it's own activities to NI) - that's the proposal for NI to reduce its corporation tax rate to match the Irish rate

CRC have already established CRC Ireland ltd, based in Cork. The company provides 'transaction services' but the choice of location would indicate it's located in ROI so as to avail of our lower corporation tax rate.

I have not found CRC (or Wiggle) competitive for a long time. Free delivery over a certain value is all it offers but if you can save more than the postage ex Germany (with just as quick a delivery time) it's not a benefit either.

ted1

C3PO wrote: »

Over the last few years I've increasingly bought from the German sites only really using CRC for smaller (free delivery) and urgent purchases. Their pricing is no longer competitive with the Germans. With this merger I suspect that gap will grow as Wiggle try to recoup what will be a major investment!
Like other posters I would worry for all the local racing that CRC support.

You won't get a pair of brake pads or a chain delivered from Germany as you would from CRC, same with wiggle

mossym

In fairness, the most recent announcements do make it sound more like a merger into one company.

eeeee

This makes me sad, more in the hands of fewer…:(

Beasty

Kaisr Sose wrote: »

CRC have already established CRC Ireland ltd, based in Cork. The company provides 'transaction services' but the choice of location would indicate it's located in ROI so as to avail of our lower corporation tax rate.

Many companies locate in Ireland as much for the tax system as it applies to companies as for the tax rate.

With a strong UK customer base NI makes sense for CRC (and possibly the combined business)

"Transaction services" will only ever form a very small part of the business and it may not make much sense to have an Irish distribution network if they can continue to make NI work.

To avail to a material extent of the Irish (as opposed to NI) tax rate and system will in all likelihood require significant further investment in Ireland. Great if it comes but I really cannot see it happening.

Kaisr Sose

Beasty wrote: »

Many companies locate in Ireland as much for the tax system as it applies to companies as for the tax rate.

With a strong UK customer base NI makes sense for CRC (and possibly the combined business)

"Transaction services" will only ever form a very small part of the business and it may not make much sense to have an Irish distribution network if they can continue to make NI work.

To avail to a material extent of the Irish (as opposed to NI) tax rate and system will in all likelihood require significant further investment in Ireland. Great if it comes but I really cannot see it happening.

I was merely responding to your post re 'possibly availing of future favourable NI tax rate changes' by stating that CRC already were availing of this in Ireland. Nobody knows the extent of the profits they attribute to CRC Ireland, but you can be certain the company was not established to create local employment!! Transaction services can be performed anywhere from Afganistan to Zimbabwe, but they chose Ireland. Wonder why?

I don't agree with the rest of your post on the basic principle that Wiggle could have located their Registered office to Ireland (for tax purposes) at anytime and without the need to acquire CRC. It's easy, and lots of companies are registered here but conduct little or no business here, or employ anybody here. It does not cost millions either!

By the way, CRC is Parcelforce's (Royal Mail) largest export customer. That's quite a statistic given that Parcel Force have a lot of large export customers. In simple terms, much of CRC's business is non UK and that would be attractive to anybody!

However, nobody can speculate on why they (Wiggle) bought CRC. It could be any, some or all of these;
Growth by Acquisiton
Consolidation
Buying Market Share
Economies of Scale
Fiscal reasons
Reduce competition
Stategic

And that's not a full list either! Eitherway, it's not an important factor for me. What is fact for me is I have found CRC and Wiggle less competitive than buying ex Germany. That remains the situation today! If it changes, great, if not, no big deal. Germany itself is a big market and those based there or selling into it will need to be competitive to maintain their German market share. As a small market, we will always be bystanders in market forces/ economics!

velo.2010

According to some well placed folk (say BBC NI), it appears that CRC will focus on MTB, Tri, Run, etc. while Wiggle will focus on Road cycling and look to compete with Halfords even more so in the UK. Both companies, coincidentally, employ around 450 staff. Sources suggest some job losses in NI due to integration but most will be maintained.

Beasty

Kaisr Sose wrote: »

However, nobody can speculate on why they (Wiggle) bought CRC. It could be any, some or all of these;
Growth by Acquisiton
Consolidation
Buying Market Share
Economies of Scale
Fiscal reasons
Reduce competition
Stategic

Has this deal actually been done?

In terms of why, one thing is quite clear. This is not "Wiggle" buying anyone. Wiggle are owned by venture capitalists, Bridgestone Capital. Bridgestone will be doing the buying and this deal is without doubt "strategic". That's what VC companies do. Behind that there is no doubt they will look to grow, and again this would be part of a market consolidation.

Bridgepoint state

Bridgepoint seeks to acquire companies with strong market positions and earnings growth potential where significant additional value can be created through expansion and operational improvement.

I would imagine with something like this there's a fair chance they may look to do an IPO eventually. That's typically how these guys work. Their bike businesses will only be a very small part of their portfolio

Kaisr Sose

I don't know if the deal is done. Neither are PLC so it does not have to be announced at the time of completion. Bike parts are not essential to the economy so I doubt this has to be cleared by EU. If 3 can buy O2, then this will go unwatched by the EU.

In my post Wiggle = the VC company. Wiggle are whoever owns or contols them. I don't understand why you need to bring the VC into this. The story is the sale/purchase of CRC, not the long term intentions of a VC company. That is speculation and it's pretty pointless!

Eamonnator

So, Bile parts are not essential to the economy, however I'm sure, that all on this forum would agree, that Bike parts are very important.

I'll get my coat.

OleRodrigo

It's speculation, but bike parts and accessories are not much different to general retail items, like clothes. Zappos.com made huge operational savings by speeding up order time to delivery, as well as offering free delivery, from installing a warehouse automation system, Kiva, recently bought by Amazon.

http://www.gxsblogs.com/keifers/2011/02/what-zappos-com-can-teach-us-about-the-supply-chain.html

Perhaps this is the route Wiggle will go down.

at1withmyself

Bike24 now acquired