Wiggle to buy ChainReactionCycles

On Thursday last week the retail trade press was reporting that Wiggle had made an offer to buy ChainReactionCycles.  On Friday the deal was reported as done.  Wiggle is owned by Bridgepoint Capital (if memory serves me right) – a private equity company. Wiggle has a stated objected of becoming a £1bn revenue business – currently about £170-£180m revenue.  ChainReactionCycles is family owned and has a slightly smaller revenue – about £150m.

Wiggle has voluntarily referred the deal to the Competition & Markets Authority (used to be called the Competition Commission) but they do not believe the CMA will object as very significant proportions of both their revenues come from overseas.  Apparently the CMA will review the deal but the usual rule of thumb is that the CMA would block the deal or would require significant divestitures if the combined market share was in excess of 20-25% on the grounds of a reduction in competition.  Although the market size for the bicycle & bicycle kit market is very hard to come by (and presumably the swim and triathlon markets ditto) I cannot see the CMA do anything other that give the deal a green light.  Halfords is thought to have a 25% market share of the bike market.

The process is expected to take 5 months before the deal can be closed.

Personally I think it would be a great shame if they did merge as these two are the most competitive in the marketplace.  This will leave Amazon – which has massively increased its cycling ranges of late – as a key competitor (and its not often in my line of business that we talk of Amazon in that way – usually it is the aggressor.  Most of the other websites I use have relatively limited ranges.  I will be watching this deal very closely.