Cervelo Cersellos Out

[BroDeal]

Ripped from Slowtwich:

Dutch conglomerate Pon, which recently bought Derby Cycle, has agreed to 'a financing arrangement' with Cervélo and has retained an exclusive option to purchase the Canadian company.

Cervélo announced the agreement late Friday on its website:

Cervélo has entered into a financing arrangement with PON Holdings BV. In addition, Cervélo and PON have signed a Letter of Intent that enables both parties to agree on a sale of Cervélo in exclusivity.

Cervélo representatives were not immediately available Friday evening to comment on the agreement.

Pon recently bought 92 percent of the shares in Derby Cycle Werke, the German company that owns the Raleigh, Univega and Kalkhoff brands, among others, for roughly a quarter billion dollars.

Pon Holdings is an international trading and service company that employs almost 11,000 people at over 250 branches across 12 countries. The company started in the middle of the last century as a bicycle importer and at one point manufactured Pon-branded bikes. Later it expanded into multiple industries, including automotive. Earlier this year it purchased Gazelle, a Dutch bicycle brand.

Cervélo was founded in 1995 by Dutchman Gerard Vroomen and Canadian Phil White. It is based in Toronto.

 

[BroDeal]

Something else I got from Slowtwitch. Cervelo is currently offering a buy two, get $2000 off deal. Supposedly this is how the LBS is being compensated:

My understanding is that the LBS gets an R5 frame set instead of the $2000. The problem is that hardly anyone buys R5 frames. Building them will bring the cost up to the same as a complete bike so there's no upside for the LBS. They dump bikes people buy and get stuck with bikes people don't buy so much.

Cheap R5s on eBay next year!

 

[Boeing]

Something else I got from Slowtwitch. Cervelo is currently offering a buy two, get $2000 off deal. Supposedly this is how the LBS is being compensated:

My understanding is that the LBS gets an R5 frame set instead of the $2000. The problem is that hardly anyone buys R5 frames. Building them will bring the cost up to the same as a complete bike so there's no upside for the LBS. They dump bikes people buy and get stuck with bikes people don't buy so much.

Cheap R5s on eBay next year!

wow more Gray Market

 

[veganrob]

Something else I got from Slowtwitch. Cervelo is currently offering a buy two, get $2000 off deal. Supposedly this is how the LBS is being compensated:

My understanding is that the LBS gets an R5 frame set instead of the $2000. The problem is that hardly anyone buys R5 frames. Building them will bring the cost up to the same as a complete bike so there's no upside for the LBS. They dump bikes people buy and get stuck with bikes people don't buy so much.

Cheap R5s on eBay next year!

Typical Cervelo. They are the worst company I have ever had to deal with. A couple years ago people were able to order a bike from Cervelo on line, have it sent to the LBS so they could test ride it. No strings attached. Then, when customer didn't buy it, the shop was stuck with the bike. Cervelo would not take it back.

 

[BroDeal]

Typical Cervelo. They are the worst company I have ever had to deal with. A couple years ago people were able to order a bike from Cervelo on line, have it sent to the LBS so they could test ride it. No strings attached. Then, when customer didn't buy it, the shop was stuck with the bike. Cervelo would not take it back.

According to the interwebs another screw job that Cervelo is currently perpetrating is lowering the price of their bikes. The poor dealers that have already taken possession get a credit good only to buy more bikes, but if it is not used by the end of January then the credit disappears.

It sounds like this is a company that is seriously FUBARred. They must have been paying five or six mi a year for their test team, which was about the amount that the much larger Trek and Specialized each spend on the teams they sponsor.

 

[BroDeal]

More gossip from Slowtwitch:

PON undoubtedly got a fantastic deal (they're a public company, so we will be privy to the terms of the sale once it's finalized). I can only make an educated guess at this point on how much Cervelo is being sold for, but what I do know for sure is that it will be a small fraction of what the company was worth 3 or 4 years ago. In 2008, the brand's valuation was easily in excess on $100 million - and by some accounts, including their own internal (albeit probably somewhat optimistic) valuation was more than $250 million. Given Cervelo's massive debts and string of poor business decisions of the past few years, they would be lucky to get 10% of what the company was worth at its peak only a short while ago. That all said, given the massive hole that they were in and that the best employees have either been forced out or jumped ship over the past year, selling for anything was probably the only real option to salvage something...


Gerard may have been unlucky with the outcome of the TestTeam (Gerard was the sole driving force behind the launch of the Cervelo TestTeam, and the global financial crisis that followed made it all but impossible to quickly find a title sponsor, leaving Cervelo to shoulder the vast majority of expenses for two years which created huge debt), but it is really Phil who bears all of the responsibility for the company's demise (not to get into the details too much at this point, but his complete lack of business sense coupled with his constant meddling - particularly after Gerard was preoccupied with the TestTeam and more so after he faded into the obscurity, was a lethal combination for Cervelo). I guess the lone bright spot is that this deal will remove Phil White from the cycling lexicon once and for all. Those in the know - within Cervelo and the cycling industry as a whole - prophesied for years that Phil will be the death of that company - how right they all were.

Later the poster acknowledged that he made a mistake and PON is not a public company.

 

[Parera]

Love the whine fest on ST about dealers not participating in the "Share the Ride aka Cervelo screwing their dealers" program. Shops that aren't participating seem to generate a lot of anger, leading people to permanently remove their business from their Cervelo shop of choice. Some friends down in the bay area who deal Cervelos (participating FWIW) have had people buying bikes from them in with similar complaints of their LBS is "ripping them off" by not participating.

Wow.

Great fuhggin job there Cervelo. Set up an awful deal for smaller shops and drive their customers way if they don't participate. Next time, Gerard should just show up and leave a turd in the middle of their showroom floor.

 

[Moose McKnuckles]

Next time, Gerard should just show up and leave a turd in the middle of their showroom floor.

Well, at least that would be consistent with what Cervelo has been doing to showroom floors for years.

 

[BroDeal]

Love the whine fest on ST about dealers not participating in the "Share the Ride aka Cervelo screwing their dealers" program. Shops that aren't participating seem to generate a lot of anger, leading people to permanently remove their business from their Cervelo shop of choice. Some friends down in the bay area who deal Cervelos (participating FWIW) have had people buying bikes from them in with similar complaints of their LBS is "ripping them off" by not participating.

Wow.

Great fuhggin job there Cervelo. Set up an awful deal for smaller shops and drive their customers way if they don't participate. Next time, Gerard should just show up and leave a turd in the middle of their showroom floor.

From several of Vroomen's posts on Slowtwitch it seems that he has nothing to do with operations. In one post he talks about getting info from White about the development and release of Cervelo's new bike, so it also appears that he has nothing to do with development either. It seems that he has been reduced to a ceremonial position on the board of directors.

I did like how Vroomen's "facts" post contained almost nothing in the way of facts. He did not address the issue that most of Slowtwitch is in denial about, that Cervelo is desperately raisiing cash at the expense of their dealers. To Slowtwich the fire sale and company sale are totatlly unrelated.

It was interesting that Vroomen thinks that Cervelo's niche is too small to attract attention and resources from the big bike companies. From what I have seen during the last two years, the bigger companies are pushing into triathlon. Cervelo is now just one of several choices.

Even worse was Slowman's article on Slowtwitch's front page, which amounted to a hagiography (Cervelo is "the Porsche of bicycles" ) along with a dubious analogy between the Cervelo sale and Cannondale doing better after it was purchased by Doral. He could have just as easily used examples of companies being destroyed after being sold. He would not have had to look very far. He could have stuck with Doral and written about Mongoose.

 

[lostincosmos]

this all saddens me very much...
i'm in the market for a new bike and just test rode an R3 and S5 on monday. i liked them both very much (and at least i could ride them - the other bikes on my list i won't get to test ride, e.g. Colnago, Time).

i hope all this doesn't mean they fall apart as a company...

 

[BroDeal]

http://www.competitivecyclist.com/w...+marketing+software&utm_term=Whats+New+011012

This year also brought the apparent near-demise of another fabulous brand, Cervélo. Given the taut language and yuletide timing of its announcement of a financing agreement with PON, it's easy to imagine the tightening of the company's financial noose.

It's not difficult to do a post-mortem on the rise and decline of Cervélo. Two engineers start a company, they get fully consumed by innovating and growing it like mad. Then they commit to an all-in marketing effort by establishing a world-class bike race team, the Cervélo Test Team. Managing and funding the team becomes an additional all-consuming thing within a scrappy start-up environment where conceivably one all-consuming thing, the business itself, was already too much.

Cervélo shut down all online sales channels about 18 months ago. Nevertheless, we stayed friendly with nearly everyone there. It was a telling sign that nearly every Cervélo veteran left the company during that period, including one of the founders. In another telling phenomenon, the pace of product innovation noticeably slowed. The launch of the S5 in 2011 was its first well-executed product release in nearly three years. (Let me preempt here anyone who might suggest that the 2009 unveiling of the P4 was anything but a trainwreck.)

The rise and fall, however, may be followed by redemption. History suggests that the likely acquisition of Cervélo by PON will be the best thing that could happen to the brand. Specialized went through a similar period of financial terror back in 2001 when it reportedly sold a 19 percent stake to Merida, a Taiwanese bike manufacturer. And Cannondale went through emergency financing then bankruptcy back in 2003 before being turned around by Pegasus, then sold to Dorel four years ago. In the time since, growth in financial value, prestige, and mindshare of those two brands has been enormous.

Cervélo is first and foremost an engineering company. In most entrepreneurial endeavors, the worst possible situation is one in which the founder has to obsess over finance instead of creative vision. Assuming that Phil White stays on to re-energize Cervélo and resumes the role of engineer-in-chief, it will once again be a force to be reckoned with by 2014 or so.

 

[Parera]

Cervelo wants to get in on the ugly non-legal TT bike scene. Move over Special-ed!

/vomit

 

[Kennf1]

this all saddens me very much...
i'm in the market for a new bike and just test rode an R3 and S5 on monday. i liked them both very much (and at least i could ride them - the other bikes on my list i won't get to test ride, e.g. Colnago, Time).

i hope all this doesn't mean they fall apart as a company...

Cervelo just dropped the price on a 2012 R3-Ultegra from $4300 to $3800. That's a pretty significant price adjustment (and a serious screw job for anyone who bought a '12 in the last 3 months). No other prices were adjusted.

The price increase on the '11 to '12 from $4000 to $4300 didn't make sense, since they downgraded the crankset from a Rotor (approx. $600) to an FSA BBRight (Gossamer) (approx. $200).

 

[veganrob]

Cervelo wants to get in on the ugly non-legal TT bike scene. Move over Special-ed!

/vomit

That is seriously ugly. Guess they did not learn anything from the P4 debacle.

 

[42x16ss]

That is seriously ugly. Guess they did not learn anything from the P4 debacle.

That is a monstrosity!!!

I'm sure that it will achieve its primary purpose though - getting Tri-Geeks to part with their hard earned $$$$ and rescue Cervelo....

I can see Slow Twitch users drooling all over this image.

 

[DirtyWorks]

That is a monstrosity!!!

I'm sure that it will achieve its primary purpose though - getting Tri-Geeks to part with their hard earned $$$$ and rescue Cervelo....

I can see Slow Twitch users drooling all over this image.

Why not take their money? There's more of a market in Tri than there is in UCI cycling at this point. I'm not against Cervelo trying things. In a year or two, they'll be selling bikes out of generic Topkey molds as if Gerard laid the fibers himself.

 

[Race Radio]

Cervelo wants to get in on the ugly non-legal TT bike scene. Move over Special-ed!

/vomit

Supposedly it is UCI legal

 

[42x16ss]

How??? There's no way those tubes are 3:1....

 

[twothirds]

How??? There's no way those tubes are 3:1....

And you can tell that from the side profile shot?

 

[gerundium]

there's going to be a UCI legal P5 later on i believe, that does not have a fairing over the front brake among other things.

 

[Benotti69]

i am still of the opinion that TTs should be ridden on road bikes with none of the aerodynamics clap trap that adorn TT bikes.

 

[42x16ss]

And you can tell that from the side profile shot?

Check the front profile shots on the front page

 

[42x16ss]

Why not take their money? There's more of a market in Tri than there is in UCI cycling at this point. I'm not against Cervelo trying things. In a year or two, they'll be selling bikes out of generic Topkey molds as if Gerard laid the fibers himself.

Hey, I say good on Cervelo for continuing to try and push bike development (even though they get it wrong from time to time). I have no grudge against the company. Just stating that these will sell like hotcakes to the tri community....

 

[BroDeal]

i am still of the opinion that TTs should be ridden on road bikes with none of the aerodynamics clap trap that adorn TT bikes.

+1

It will be interesting to see if triathlon makes a move to reel in bike tech. It is getting ridiculous when everyone at a tri is rocking $12K+ "superbikes." Cycling went through its period of bike craziness in the 90s.

 

[STODRR]

Interesting hydraulic brakes on non-DI version.