For more crisp and insightful business and economic news, subscribe to The Daily Upside newsletter. It's completely free and we guarantee you'll learn something new every day.

In the world of finance, everyone gets to wheel and deal. But only a chosen few get to deal in two-wheelers.

A private equity consortium led by New York-based KKR joined that exclusive club Monday, agreeing to shell out $1.8 billion for Accell, the maker of bicycle brands Sparta, Batavus, and Raleigh. It's a vote of confidence in a sector that performed well in the pandemic, is poised to do better, and that lends itself to lots of tire-some puns.

Chain Reaction

European cities spent the last two years adding significant cycling infrastructure so Covid-conscious people can avoid crowded public transportation. Netherlands-based Accell reported a 17% rise in sales to $1.5 billion in 2020 and, last month, said 2021 sales through November were up 4.4% even amid a parts shortage due to global supply chain problems. Accel's shares have tripled in value since March 2020.

The private equity buyers are paying €58 euros cash for every Accell share, a 26% premium on their Friday closing price. Investors have shown a willingness to pay up as they gear up for a spot in the growing e-bike market, something Accell's brands are in the race to win. Van Moof, another Dutch bike firm and an e-bike specialist, raised $128 million last year to fund US expansion, but European markets have proven the more attractive bet of late:

  • As of October 2021, European venture capital led the world in micromobility deals — start-ups on the content raised a record $778 million or over a third of global transactions, according to PitchBook data.
  • Funding levels for US start-ups in micromobility — which includes bicycles, e-bikes, and electric scooters — fell to the lowest since 2014, with $335 million invested in a shocking drop from the $3 billion invested in 2018.

Saddle Sores: Outdoor bikes had a much better day than beleaguered Peloton, which is reportedly halting production on some of its exercise bikes and contemplating layoffs. Blackwells Capital, an activist hedge fund with a stake in the struggling indoor exercise bike manufacturer, called Monday for the company to fire CEO John Foley and put itself up for sale.