A sponsor of the Movistar professional cycling team is seeking to emulate the recent takeover of Rapha, the upmarket bikewear brand, by exploring a potentially lucrative sale.
Sky News understands that Endura, which is part-owned by a private equity firm, is considering appointing advisers after receiving a flurry of approaches to buy the business.
Endura, which is headquartered in Livingston, Scotland, is the UK’s second-largest maker of branded cycling apparel.
It sells to 2500 bike-dealers in more than 40 countries and sells goods for enthusiasts of road-cycling, triathlon and mountain-biking as well as ordinary cyclists.
Sources said that some of the losing bidders for Rapha, Endura’s larger rival by revenues, had approached the company in recent weeks about a possible takeover.
Endura has roughly half Rapha’s sales, but its margins are more impressive, with a forecast £3.5m in earnings before interest, tax, depreciation and amortisation on turnover of £30m this year.
Founded in 1992 by cycling fan Jim McFarlane, Endura has a greater focus on technical performance and functionality than style.
It has moved its price positioning to the more expensive end of the market in the last ten years, and brought Penta Capital on board as an investor in 2014.
Penta owns just under 30% of the company.
Roughly 40% of Endura’s sales are in the UK, with the majority in Europe, Russia, North America, Australia and New Zealand.
The company has also seen a sharp upturn in pre-bookings for the forthcoming autumn-winter season, according to insiders.
News of a prospective auction of Endura comes just a month after control of Rapha was snapped up by a vehicle set up by two scions of the billionaire Walmart dynasty
RZC Investments – set up by Steuart and Tom Walton, both grandsons of the Asda-owner’s founder, Sam Walton – agreed to buy a controlling stake in Rapha in a deal valuing the business at about £200m.
Rapha’s cost base is higher than Endura’s, partly because of the former’s network of ‘clubhouses’, used as showcases for the brand.
Among the unsuccessful bidders for Rapha’s were private equity firms including Investindustrial, a joint owner of Aston Martin.
Some potential buyers were deterred by the lofty value expectations of Rapha’s shareholders, with the company potentially selling for a price worth more than 20 times annual profits.
Road cycling is now estimated to be a $47bn-a-year global market, making it the largest sports category in the world.
Penta Capital declined to comment.
Source: Sky News