The Limited Times

Now you can see non-English news...

Prophete and Cycle Union saved: Investor from Asia buys bike manufacturer

2023-03-03T15:59:38.585Z


A sigh of relief in the bicycle industry: an investor from Singapore buys Prophete and Cycle Union. To date, the Dutech Group has produced ticket machines for Deutsche Bahn, among other things. What does she intend to do with the bicycle manufacturer?


Enlarge image

Good mood:

There will also be bicycles from Prophete and Cycle Union in the future, an investor has taken over the bike manufacturer and wants to continue it

Photo: Paul Masukowitz / Prophete

Over the past two months, a good dozen interested parties have expressed their interest in the insolvent bicycle manufacturer Prophete near Gütersloh and its subsidiary Cycle Union, based in Oldenburg, Lower Saxony.

As quickly as potential buyers from Germany and abroad made their appearance, the field cleared up again just as quickly.

At the beginning of the week, the provisionally appointed insolvency administrator

Manuel Sack

told manager magazin about three remaining interested parties.

Now the die is cast: The strategic investor Dutech from Singapore takes over Prophete and Cycle Union together with the remaining 400 employees.

Neither Sack nor Dutech wanted to comment on the purchase price.

"This is a good day for Prophete and Cycle Union," Sack said in an interview with manager magazin on Friday.

The employees in Oldenburg and Rheda-Wiedenbrück reacted with relief, even clapping at the staff meetings.

"That's rare and unusual on such occasions," says the expert for insolvency and restructuring law from the law firm Brinkmann and Partners.

At the end of last year, Prophete filed for bankruptcy at the Bielefeld district court.

In the 2021/22 financial year, Prophete suffered from "significant problems in procurement", which had a fatal impact on sales and turnover.

At the same time, the long-established company was burdened by high liabilities and full warehouses combined with declining demand.

When a hacker attack paralyzed production for weeks at the end of November 2022, the bike manufacturer ran into serious liquidity problems.

The lenders no longer wanted to plug the new financial hole.

According to its own statements, Dutech is the world's leading developer and manufacturer of security and home products with more than 2,600 employees in Europe, North America and Asia, 800 of them in Germany.

The group generates an annual turnover of 300 million euros, including with e-bike components, the sole shareholder is the American

Johnny Liu

.

"We regard Prophete and Cycle Union as a strategic investment. They fit very well into our portfolio," says Europe boss

Rolf Hellenbrand

in an interview with manager magazin.

Hellenbrand assures that the locations will be retained and production will not be relocated.

As an internationally active group, Dutech has very good contacts with the most important suppliers worldwide.

Investor from Singapore wants to keep all jobs and locations

According to Hellenbrand, Dutech has been investing in companies in various industrial sectors in Europe since 2011, developing these companies further in order "to be successful together with them in the market".

The group is active, among other things, in the areas of parking space management, local public transport and ticket machines.

For example, the Hanover-based company Almex produces ticket machines for Deutsche Bahn.

Dutech brings expertise in the bike sector with it, among other things, through its own product: the infinitely adjustable so-called "NuVinci" planetary gear replaces the conventional gear shift on bicycles.

The product is mainly installed in premium bikes and can be used on both e-bikes and conventional bicycles.

"For many years we have been the only manufacturer licensed worldwide for this technology," says Hellenbrand.

Dutech supplies all major brands in the European bicycle industry with this product.

In 2020, Dutech also took over the Continental Bike Systems division from the automotive supplier Continental.

The division had designed an e-bike drive, which is now being further developed and is to be launched on the market.

According to various reports, Continental had previously failed to develop the e-bike business to a profitable size.

Expertise in the field of gears, new e-bike drive planned

While the smaller subsidiary Cycle Union is represented in the higher-priced segment of the specialist trade with the brands Kreidler and VSF Fahrradmanufaktur, Prophete mainly produces inexpensive bicycles and sells them under the same name in supermarkets and hardware stores.

Dutech wants to continue this "successful strategy".

"In the medium term" neither the product portfolio nor the sales channels would change significantly.

"We are in contact with these major retail customers. Concrete projects are already planned," says Hellenbrand.

The manager did not want to comment on whether the management of the Prophete Group would remain on board.

Insolvency administrator Sack Stand now puts Prophete's liabilities at around 100 million euros, although this could still change.

The insolvency proceedings, which have been ongoing since March 1, will show what the creditors will see again.

The creditors can now register their claims until May 2nd.

It is clear that the liabilities of Dutech were not taken over and that Prophete and Cycle Union can therefore no longer burden them in the course of the so-called "transferring restructuring", Sack explains in an interview with manager magazin.

According to Sack, the sales process that started in January was based on three decisive factors, which he used to pre-select potential buyers: transaction security, price and speed.

"It has to be done quickly now. The season will start shortly. We don't have time to negotiate for weeks," the insolvency specialist explained the pace shown earlier this week.

Based on these criteria, Dutech was the most convincing overall.

Financial investors were also interested

At the beginning of February, financial investors were also among the interested parties in addition to companies from the bicycle industry, but then withdrew.

They thought the business was too capital-intensive or they considered the prospects of the bicycle industry as a whole to be too uncertain for a takeover at this point in time, Sack explains in an interview.

In fact, many bicycle manufacturers and dealers are currently feeling a drop in demand.

In times of high inflation, many people refrain from making purchases.

At the same time, the camps are overflowing.

"The warehouses are fuller than ever. Fuller than you would like," says Thomas Hempelmann from the Association of German Bicycle Trade (VDZ).

The reason: In the course of the supply chain crisis, bicycle parts that have been missing for a long time are now available.

Many orders that were not delivered in the first phase of the pandemic are received at almost the same time as orders that are still young, creating an oversupply.

Manufacturers and dealers have to reduce this overcapacity - often at price reductions of 30 percent and more.

That puts pressure on the margins.

This is one of the reasons why 2023 will be a “difficult year” for the bicycle industry, the two-wheeler industry association recently explained in an interview with manager magazin.

Dutech Europe boss Hellenbrand is nevertheless optimistic for Prophete in particular and for the industry in general.

"We are a long-term oriented investor. And we think that the market as a whole for e-bikes and related e-mobility products will have a very bright future."

Source: spiegel

All news articles on 2023-03-03

You may like

News/Politics 2024-03-13T09:32:47.135Z

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.