Tandem board member and MD of Falcon Paul Vicary told BikeBiz this morning that he has been looking for an accessories company for some time and had been eyeing up various companies ripe for a takeover. He plumped for Steve and Andy Wassells Two Wheel Trading of Solihull because its a well managed company, with good brands, good service to customers, and excellent potential.
Tandem shareholders meet at an EGM on 22nd September. Should approval be forthcoming, which is highly likely, Tandem will pay £200 000 in cash and £500 000 in shares to acquire Two Wheel Trading (incorporated in 1983) which had a 1998 turnover of £3.5m and pre-tax profits of £143 000.
At the same EGM, Tandem is likely to also buy Pot Black (UK) ltd., a snooker and pool tables manufacturer.
Tandem is raising £3.4m via a placing and one-for-five open offer at 5p a share and is hoping to move from the main stock market to the Alternative Investment Market (AIM) by the end of September. This will be more attractive for new shareholders, who will pay less tax.
Paul Vicary told BikeBiz that there will be no changes of name, location or staff at Two Wheel Trading. Steve and Andy Wassell will remain with the company and will continue to run it.
Commenting upon the buy-out Paul Honeghan, marketing manager of Two Wheel Trading said:
As part of Tandem Group plcs corporate expansion plans Two Wheel Trading will be one of their acquisitions this is, of course, conditional upon final shareholder approval.
Two Wheel Trading Co. remains a Limited company in its own right and will continue to provide an excellent service to all of its customers but now with some of the benefits of being part of a growing leisure group.
Paul Vicary wants to Falcon and Two Wheel Trading to work together to maximise their individual potentials:
Weve bought Two Wheel Trading to expand it, not sit still with it. The bike accessory market is a good, solid one and adding an accessories company is a natural progression for us. The quickest way into the market is by acquisition.
Tandem is also looking for further acquisitions, both in the wider leisure lifestyle market as well as in the bike trade.
There are many opportunities for further growth in the bicycle business, said Vicary.
We are a major player but would like to be a bigger player. This will come through organic growth, but, in future, who knows?
FULL TEXT OF TANDEM PRESS RELEASE
29 August 2000
TANDEM GROUP PLC
ACQUISITION OF POT BLACK (UK) LIMITED
TWO WHEEL TRADING COMPANY LIMITED
PLACING AND OPEN OFFER TO RAISE £4 MILLION
in conjunction with a
CAPITAL REORGANISATION AND ADMISSION TO AIM
Tandem Group plc ("Tandem"), one of the UKs leading manufacturers and distributors of bicycles, today announces the acquisition of two companies with a combined annual turnover of almost £10 million, Pot Black (UK) Limited, a manufacturer of snooker and pool tables, and Two Wheel Trading Company Limited, a Midlands-based manufacturer and distributor of bicycle accessories. The consideration for the acquisition of Pot Black is £932,500, to be satisfied as to £800,000 in cash and the balance in shares. The consideration for the acquisition of and Two Wheel Trading is £700,000, to be satisfied as to £500,000 in shares and the balance in cash.
At the same time, Tandem is effecting a Placing and Open Offer of 80,000,000 new Ordinary Shares at 5p per share to raise approximately £3.4 million net of expenses, and proposing a reorganisation of the companys share capital, cancellation of its listing on the Official List and the admission of its enlarged share capital to trading on AIM. The Open Offer is being made by Peel Hunt plc on behalf of the company on a basis of 1 new Ordinary Share for every 5 shares held on the record date of 21 August 2000. It is anticipated that the Companys shares will cease to be listed with effect from the opening of business on 26 September 2000 and that the enlarged share capital (save for the shares to be issued as consideration in respect of the acquisitions which will be admitted on 28 September 2000) will be admitted to AIM on 28 September 2000.
The proposals include a write off of current bank debt of DM 4,121,344 and £48,000, and the conversion of DM 1,236,403 of bank debt into New Ordinary Shares at 7.2 pence per share. This debt restructuring, which is conditional upon the Placing being completed, will increase net assets by approximately £1,700,000, compared with the cash consideration of £1,000,000 for the acquisitions. As a result of the proposals, the Groups pro-forma net asset position will change from negative to positive.
Commenting on the proposals, Chairman Graham Waldron said today:
"Following the formation of the current board last year, our focus has been on increasing the profitability of our bicycle business and formulating a strategic plan to enhance shareholder value. Subsequent research into the UK sports and leisure equipment market, where the Group already has a significant position supplying bicycles, confirmed a fragmented supplier base with potential for consolidation and expansion."
"We believe that Tandem will be in a stronger position to become a major supplier of sports and leisure equipment as a result of the acquisitions we have announced today and the proposals we have put before our shareholders. We have recruited an experienced, specialist sales and marketing director to develop new business in outdoor play equipment which should significantly improve the seasonality of Pot Black. We are confident that Two Wheel Trading will produce synergies in several areas including marketing, component sourcing and production. We have identified already a number of further target activities and businesses as possible opportunities for future expansion in this growing sector."
"Tandem has made a sustained recovery in the past eighteen months. Last month, the Group announced a return to profit for the year to 31 January 2000, after loss making activities have been eliminated, surplus assets disposed of and bank borrowings reduced from some £15.5 million at the end of January 1999 to approximately £9.3 million a year later."
A circular to Shareholders (which comprises an admission document under the AIM Rules) providing details of the proposals is being posted to shareholders today along with an Open Offer Application Form. Copies of the document are available for collection for not less than a period of 14 days from the date of admission of the Companys Ordinary Shares to trading on AIM from the companys registered office, Bridge Street, Brigg, North Lincolnshire, DN20 8PB, or from the offices of Peel Hunt plc, 62 Threadneedle Street, London EC2R 8HP, or from www.peelhunt.com.
For further information:
Mervyn Keene, Finance Director 01733 211399
Adam Hart, Peel Hunt plc 07966 223274
Record date for the Open Offer 21 August 2000
Latest time for receipt of Open Offer
Application Forms and payment in full 21 September 2000
EGM 22 September 2000
Cancellation of dealings on the Official List 26 September 2000
Commencement of dealings the Ordinary Shares
(other than the consideration shares) on AIM 27 September 2000
Crediting of CREST accounts in respect of
the Placing and Open Offer 27 September 2000
Commencement of dealings the consideration shares
on AIM 28 September 2000
Posting of definitive certificates in respect of
the Placing and Open Offer 2 October 2000
The Open Offer Application Form represents a right to apply for Open Offer Shares. It is not a document of title and cannot be traded. Any rights to subscribe for Open Offer Shares under the Open Offer which are not exercised will lapse and the Open Offer Shares will be placed under the terms of the Placing. Qualifying Shareholders should be aware that the Open Offer is not a rights issue and that Open Offer Shares will not be sold in the market for the benefit of those who do not apply under the Open Offer.
Peel Hunt plc, which is regulated by The Securities and Futures Authority Limited, is acting for Tandem Group PLC in relation to the matters described in this announcement and will not be responsible to anyone other than Tandem Group PLC for providing the protections afforded to customers of Peel Hunt plc nor for providing advice on the contents of this announcement or any matters referred to herein. In particular, Peel Hunt plc as nominated adviser and nominated broker to the Company, in connection with its application to trading on the Alternative Investment Market, owes certain responsibilities to the London Stock Exchange which are not owed to the Company, the Directors, or to any other person in respect of their decision to acquire Ordinary Shares in reliance on any part of this announcement. No liability is accepted by Peel Hunt plc for the accuracy of any information or opinions contained in, or for the omission of any material information from, this announcement, for which the Company and the Directors are solely responsible.