Halfords steps up cycling focus with twin acquisition

Halfords has acquired Swansea online bike sellers Tredz and Wheelies Direct for at least £18.4m cash.

The FSTE 250 bikes and car accessories retail chain, which made the purchase using its existing borrowing facilities, said the acquisition will be earnings-enhancing from the first year of ownership.

Depending upon the financial performance of Tredz in the year to next February, a further fee could be payable to the vendors, with the total purchase price expected to equate to around seven times earnings before interest, tax, depreciation and amortisation.

Both Tredz, an online retailer of premium bikes and accessories, and Wheelies, which is the UK's largest provider of bicycle replacement for insurance companies, are based in South Wales, where they will continue to trade on a standalone basis under co-founder Keith Jones and the existing management teams.

Together, Tredz and Wheelies generated revenue of roughly £32m for the year ended 29 February 2016, up from near £24m the prior year, and EBITDA of £2.4m.

Halfords chief executive Jill McDonald said: "We continue to believe in the long-term growth potential of the cycling market.

"Keith and his management team have done a fantastic job of building a successful online retail operation and we look forward to working with them to develop and grow the businesses further."

In the year to 1 April, Halfords saw its like-for-like sales from cycling decline 0.9% after a strong previous year.