Cannondale to Acquire Sugoi

Bethel, CT-based Cannondale Bicycle Corp. has reached an agreement to acquire Sugoi, a maker of technical apparel for cyclists, runners and triathletes. Both companies are privately held and the terms of the deal weren't disclosed. Sugoi's operations, management and staff will remain in its Vancouver headquarters, and it will retain a separate sales team.

Sugoi will strengthen Cannondale's presence in the cycling and triathlon markets, in addition to giving the bike company a strong foothold in the running segment. Cannondale will continue to offer its own branded line of softgoods. For Sugoi, the acquisition provides a platform to help the rapidly growing brand expand on a global level.

Matt Mannelly, president of Cannondale, tells SGB that the companies share a similar brand equity and positioning in the marketplace.

"We really are a premium brand focused on the specialty channel, specifically the bike channel," says Mannelly. "We really wanted to have an increased presence, but only if [given] the opportunity to hook up and partner with another brand that is of the same ilk that we are."

He adds, "Sugui is a brand that has a very similar history and culture to ours in terms of being very performance-oriented, very technical, and very authentic. So we feel like this really expands our presence and is consistent with our strategy."

Mannelly also notes that the brands complement each other well. "Our consumers cycle, run, bike and swim," he says. "We just think that this is a natural extension for us, and we think Sugui is a perfect brand [with which] to manifest that extension."

For its part, Sugoi was not for sale and initially rebuffed Cannondale's advances. But David Hollands, who co-founded Sugoi in 1987, reports that the company soon recognized the benefits of tapping into Cannondale's "extremely strong management team," manufacturing expertise, and wide distribution network.

"It was a great brand, [with] great operations and a great management story, and when those things lined up on both sides, it was, surprisingly, a much easier decision than we thought it could have been," relates Hollands. In particular, he believes Sugoi's growth will receive a big boost from utilizing Cannondale's international distribution centers in Europe, Australia and Japan. "We saw them as an organizational complement to us, if not a big lever to help us grow," he says.

Hollands points out that Cannondale is equally eager to tap into the growth opportunity in running.

"[Cannondale] is a true brand in the marketplace," says Holland. "It's going to be a global leader and bike is a piece of it and run is a piece of it. There's a lot of opportunity there."

Both execs also cite the major advantage of now having two highly reputable brands selling into the independent bike shop channel. Moreover, Mannelly suggests that both brands still have sizeable growth opportunities in the outdoor market.

"The awareness level and the affinity for both of these brands, given their size, is through the roof," notes Mannelly. "We just think that the potential for both of these brands is significant on a global basis."

?THOMAS J. RYAN