Cannondale Sold Off

Yesterday, Cannondale Bicycle Company went up for auction and was purchased by an affiliate of Pegasus Partners II, L.P. (Pegasus, as you might recall, is Cannondale’s largest, secured creditor and the company that put up the cash in late January, acting as the “stalking horse” bidder in this sale). Officials at Cannondale are optimistic that the company will emerge from Chapter 11 within the next several weeks. The sale still must be approved of by the Courts, but most believe this to simply be a formality. For all intents and purposes, the sale is over. At least three questions are hovering in most people’s minds at this time:

(1) How much was Cannondale sold for?

(2) Will the new owners continue to run the motorcycle division?

(3) Will Cannondale continue to build their bikes in the United States?

How much did Pegasus wind up paying for Cannondale? Unfortunately, that figure remains a mystery as the terms of the sale are not being disclosed at this time.

More clear is the future of the motorsports division—or lack thereof. The Cannondale press release notes that Pegasus purchased both the bicycle and motorsport divisions, but clearly states, “Pegasus has indicated that it does not intend to operate the motorsports division.”

Will Cannondale production remain stateside? The answer is not exactly clear at this time, though one sentence in the press release (attributed to Cannondale founder, Joe Montgomery) offers a small glint of hope for the American welders. “This is a huge step toward successfully realizing our three key objectives: ensuring a quick emergence from Chapter 11, restoring focus and adding resources to the bike division so it can continue to thrive and prosper, and preserving our employees’ jobs in Connecticut and Pennsylvania [italics added].” 

At this time, Cannondale is being managed by Dan Alloway (Vice President of Sales and European Operations) and Scott Montgomery (Vice President of Marketing). Both are confident that the company will survive its encounter with bankruptcy. Notes Montgomery, “We’re happy to be able to concentrate on the bike business again, and we’re feeling great about the future with Pegasus as our partner. We’re producing and shipping 2003 product every day, and the 2004 line is loaded with new innovations.”

David Uri, a Partner at Pegasus also voiced support for his company’s new acquisition.  “Cannondale is one of the world’s premium bicycle brands. The fact that the bike division has remained profitable despite the distraction and costs of its now closed motorsports business clearly demonstrates the strength of the brand. Our job now is to let Cannondale concentrate on what Cannondale does best--designing, manufacturing and marketing lightweight, high-performance bicycles for the specialty retail market."