[Cycling] Super Cheap Building Category Killer

[Biker]

The Australian is reporting (May 14, 2008) that Super Cheap Auto Group has purchased Victoria's Goldcross Cycles chain in a $15 million deal with the intention of building a category killer along the lines of its BCF group.

Super Cheap Auto buys Goldcross Cycles | The Australian

AFTER building two "category killer" retailers, Super Cheap Auto Group is moving on to a third: bicycles and accessories.
The Brisbane-based listed company is buying all the shares in Melbourne's Goldcross Cycles in a $15 million-plus deal from which it aims to build a national bicycle retail chain.
The model follows the one Super Cheap used three years ago to establish its BCF ("Boating Camping Fishing") division, when it took over a small retailer and then moved quickly to expand.
"Category killer" is the industry term used for retailers that through market saturation, bulk buying and cheap pricing make it difficult for smaller operators to compete in a sector.
The bicycle and accessories market has grown rapidly since 2003 and is now worth more than $1 billion annually.
Public policy, environmental concerns and demographic changes would continue to drive growth, Super Cheap managing director Peter Birtles said.
Super Cheap will initially pay $6 million for Goldcross, assume $5 million in debt and pay for stock at time of settlement.
A performance-based payment of up to $3 million will be due in August next year.
Mr Birtles said Goldcross was Australia's largest chain of wholly owned bicycle retail stores, with 11 stores around Melbourne.
The business was established 30 years ago and is still managed by its sole shareholder, David Hall.
Under the deal, Super Cheap will also pay about $1.4 million to buy 50 per cent of the shares in distributor Australian Bicycles from Mr Hall, and the remainder are under option. Australian Bicycles owns rights to distribute Fuji, SE and Kestrel brand bikes and accessories.
Super Cheap Auto Group's shares closed up 9c at $3.13.

 

[Biker]

also flight centre are looking at it too

http://www.egoli.com.au/egoli/egoli...A95-4BF5-8A37-0C25D9B4E63C}&Section=NewsViews

Flight Centre Limited (FLT) has continued its expansion into new fields of business by making a strategic investment in the emerging cycling sector. Flight Centre has secured permanent rights to the Indi brand and exclusive Australian wholesale distribution rights for the Merida cycle brand for three years from 1 July 2008.
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M&A general manager David Smith said the company had identified solid expansion potential within the industry as part of its ongoing investigation of new business opportunities.
"The company aims to grow the Merida and Indi brands in Australia by developing close relationships with existing retail partners, expanding the brands wholesale sales team and drawing on Flight Centre's marketing and sales expertise to increase brand awareness," Mr Smith said.
"The investment is in line with the company's previously announced strategy of selectively diversifying its revenue streams."
Flight Centre said that Merida is one of the world's biggest manufacturers of high quality road, mountain, hybrid and electric cycles, while Indi produces a range of durable, entry-level bikes.
The company said the investment was not material, with Flight Centre paying $150,000 plus stock at cost.
Flight Centre is also in discussions with Gainsdale Propriety Limited about a joint venture involving the 99 Bikes retail chain.
The company said that its managing director Graham Turner holds an interest in Gainsdale, so the proposed terms of any future agreement would be subject to independent review.
Flight Centre said that Mr Turner would also be disqualified from participating in the board's decision on the issue.