Chained to its rival? Halfords swoops in for embattled bike chain Evans Cycles
Britain’s largest bike chain Halfords is in talks to rescue its beleaguered rival Evans Cycles, according to Sky News late last night.
Halfords is understood to be one of several parties which have shown interest in buying Evans, which has hurried up the bidding process in an effort to avoid collapse.
The news comes as Graham Stapleton, the former Dixons Carphone boss who took on the role of Halfords chief executive early this year, looks to unveil a new strategy today which will see the business focus much more on cycling and less on periphery goods such as campaign equipment.
George Salmon, equity analyst at Hargreaves Lansdown, said: “Given the natural cross-over between the two, it’s no great surprise Halfords is reported to be interested in Evans. Still though, Halfords investors should be aware that Evans, which attracted a valuation of £100m as recently as 2015, needs stabilising.”
Salmon added: “Recent difficulties mean around £10m is likely needed to keep the wheels turning, and more investment would surely be required to effect a full turnaround at the 97-year old name.”
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The news comes less than a fortnight after Sky News reported that potential bidders for the embattled bicycle chain have been asked by advisers to put forward any final takeover offers by the end of this week.
With more than 60 stores across the UK, Evans Cycles, which is owned by the private equity firm ECI Partners, shares the challenges faced by retailers across the country of a consumer shift towards online shopping.
Earlier this month it emerged that Cycle Evans has already held urgent talks with lenders for a capital injection, with sources telling Sky that the firm needed at least £10m before the end of the year.
A mix of retail firms, private equity funds and turnaround investors are rumoured to have been consulted about a possible takeover of Cycle Evans, which is being advised by Big Four accountancy firm PricewaterhouseCoopers (PwC).
Halfords, which operates nearly 500 outlets, is set to hold a capital markets event for investors later today, although no decision on the talks is expected to be revealed.