What’s the Deal with Niner’s New Ownership?
Will the recent acquisition of the Colorado-based mountain bike company be the death knell for the brand, or will it emerge stronger and more innovative than ever?
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After months of uncertainty, Niner, the Colorado-based bike company that helped to establish 29-inch wheels in the industry, has been purchased by UWHK Ltd., whose parent company also owns Dayton, Ohio–based Huffy. The move means that the boutique bike manufacturer will continue servicing existing warranties and building new bikes from its Fort Collins headquarters, at least for now.
The acquisition comes after a protracted process that began on November 22, 2017, when Niner announced that a cycling-friendly, Colorado-based investor group, Columbia Basin Partners, had agreed to purchase the company. “As a mid-market boutique brand, we realized that in order to grow and stay competitive, we needed to be with a larger partner. Making bikes takes a lot of money, and as a sole proprietor, no matter how deep your pockets are, at some point you get to the bottom of your pockets,” said Chris Sugai, Niner co-founder and president, at the time.
The week after it announced the deal, Niner filed for Chapter 11 bankruptcy, with Sugai stating that the decision was the “cleanest and fastest way” to facilitate the transaction to Columbia Basin Partners. In its filing, the company listed assets of $9.8 million and liabilities of $7.9 million. At the time, the company planned to complete the sale and emerge from Chapter 11 by January 30, 2018.
Declaring Chapter 11, however, gives federal district courts final say over any deal. In an effort to secure the best terms for Niner’s creditors while still ensuring the company’s financial future, the U.S. Bankruptcy Court for the District of Colorado put the Colorado transaction on hold and opened the sale to other investors. In January, Columbia Basin Partners withdrew its offer, but two new bidders emerged, including a group led by Allied Cycle Works co-founder Tony Karklins. In the end, UWHK won out. Though details of the sale weren’t disclosed, UWHK filed a motion to purchase for $3.1 million in February.
UWHK is a division of United Wheels Ltd., a Hong Kong–based investment consortium that, in addition to majority ownership in Huffy Corp., owns Allite Inc. and VASST Bicycles, both of which will be launching later this year. (No one from UWHK would confirm what, specifically, those two brands will make.) The firm also is looking for ways to expand its footprint. “They have a vision for cultivating a diversified organization that becomes a house of brands. They are very interested in investing in high-end cycling brands,” says Bruno Maier, managing director for new business at United Wheels.
Maier is a cycling industry veteran who has worked at Huffy, Pacific Cycles, People for Bikes, and, most recently, Rocky Mounts, where he was president. “Niner made sense because it was a very strong team that, through circumstance, ended up in a difficult financial situation. The investment will make it possible for them to run more efficiently and grow the business.” Maier stresses that United Wheels has confidence in Sugai and Niner. “Their team will work closely with our board of directors going forward, but ultimately they will retain creative and design independence. We are confident in the plan they have in place,” he says.
Following the sale, Sugai was upbeat. “United Wheels wants to invest heavily in our R&D so that we can stay competitive and continue to produce market-leading bikes,” Sugai said. “It’s business as usual for us now. It means we can keep our team of 30 employees together and move forward to expand our reach as a premium off-road brand.” Sugai said Niner plans to show several new designs at the upcoming Sea Otter expo later this month.
Not everyone was as optimistic about the deal. Niner co-founder Steve Domahidy, the engineer behind the company’s CVA suspension, left the brand in 2011 but retained a small stake until the bankruptcy. He sounds a note of caution. “After these deals, you always hear ‘everything is going to stay the same,’” Domahidy said following news that the bankruptcy deal would not satisfy his stake. “But it doesn’t make any sense. A new owner buys a company that was run into the ground and then let’s the same people keep doing the same things?” Domahidy, who has since created Viral Bikes, says he hopes things will change at Niner. “I left, in part, because I didn’t think Niner was positioning itself to stay relevant. It’s still a brand that’s near to my heart. I want them to succeed and thrive. But it’s going to be tricky.”
Acquisitions in the bike industry have a checkered history. From Gary Fisher, which Trek purchased in 1993 and later dissolved, to Schwinn, which lost its brand identity and momentum when Pacific Bicycles purchased it at auction in 2001, there are plenty of examples of deals that have not ended well. On the other hand, Cannondale has continued to thrive after it was purchased in 2008 by Dorel Industries, which also owns Schwinn, Mongoose, Roadmaster, and GT. And Maier points to the Dutch conglomerate Pon Holdings as another promising example. “There was lots of doom and gloom when Pon acquired Cervélo, and then later Santa Cruz,” he says. “But today those brands are stronger than ever.” Maier adds that while United Wheels owns some manufacturing facilities in Asia, there are no real synergies between those plants and Niner’s needs, which will allow the Colorado brand to continue building high-end bikes the way it always has.
For consumers, Niner’s purchase is only good news, as the company otherwise likely would have been shuttered. Niner has long produced excellent bikes, including the 2013 Gear of the Year–winning Rip9 RDO. It has also helped break ground with gravel bikes such as the RLT9 and plus-size machines like the ROS9+. The company’s sale means there is potential for continued innovation and that Niner will continue to honor its warranties and customer service for existing owners. The brand has also been instrumental in trail advocacy through the years, and Sugai says that will remain a priority.
“It’s been a tough few months, but we celebrated a little when the deal finally closed. Then we got right back to work,” Sugai says. “My job is to make sure that Niner continues to grow and succeed. We definitely had some troubles, but with the investment, we’re in a stronger position than ever to move forward and to continue building great bikes. And that’s exactly what we plan to do.”