Germany’s Signa Sports agrees $3.2bn Spac deal for NY listing
Online retailer acquires UK rival Wiggle as part of tie-up with Ron Burkle investment vehicle
Berlin-based online retailer Signa Sports United has struck a deal to list in New York through a merger with a blank cheque company led by US billionaire Ron Burkle, in a tie-up valuing the group at $3.2bn.
Signa, which offers customised services from selling high-end bikes and hiking gear to stringing tennis racquets, is seeking rapid expansion through acquiring smaller rivals in the US and Europe.
The move is a bet that the rise of online retailing can transform what had previously been seen as a niche market: serving the desires of enthusiastic amateurs obsessed by sports.
Signa Sports still faces a fierce battle for customers online, where the market is dominated by large US rivals such as Amazon and eBay, as well as established sports retailers such as Decathlon, which also continue to expand their offerings and services.
But Stephan Zoll, chief executive of Signa Sports, is confident that consumers will choose to buy their sports equipment from a specialist provider with a wider range of stock and the ability to customise products.
“We’re offering the user or the consumer much more than just a regular one size fits all shopping experience,” he said. “We string tennis rackets, we customise bikes, we customise team jersey sets. All of these value added services you don’t find in a general store.”
The former vice-president of eBay’s German business said Signa will continue to benefit as customers of specialist retailers shift to buying more over the internet.
As part of the deal, Signa Sports will also acquire UK-based online rival Wiggle from its private equity owners, the company said on Friday.
Signa Sports and Wiggle expect to generate a combined $1.6bn in net revenues in the current financial year to September.
Spacs have become a popular alternative to the traditional IPO process for companies looking to list on a stock exchange, accounting for nearly half of the more than $200bn raised globally in new listings over the past year.
The Spac structure will allow Signa to raise more capital than in a European initial public offering while also acquiring Wiggle, said Alex Johnstone, chief financial officer. He said the deal, which is expected to leave the company with $350m in cash on its balance sheet, will give it the firepower for more deals.
Yucaipa Acquisition Corp, a special purpose acquisition vehicle launched last year by Burkle, is contributing $345m in cash and an additional $300m through a so-called Pipe, or private investment in public equity. Burkle, the majority shareholder in private members’ club group Soho House, is also personally providing $50m to the Pipe alongside other investors.
Financial terms of the Wiggle deal were not released, but a person close to the company said Signa Sports is acquiring the retailer for $570m.
Signa Sports’ other brands include Fahrrad.de, Bikester, Probikeshop, Campz, Addnature, Outfitter and Stylefile. It also provides ecommerce technology to other companies, for example running the online shop for the International Tennis Federation, the governing body for tennis.
The deal with Burkle’s Yucaipa comes after Signa Sports acquired Ohio-based Midwest Sports in February, giving it a large presence in the US for the first time.