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Easton had been on a big selling spree recently, with Baseball & Hockey sold off a little while ago, and Riddell previously up on the blocks. It seems that they have wanted to shed all of the brands other than Bell & Giro. Nothing wrong doubling down and being focused, knowing what you want to go for. But I was a little surprised when earlier this week the press release came out that Chris Tutton had stepped in and bought Easton Cycling.

 

 

What I find interesting is that the president of Race Face bought it. Not Race Face.

Chris Tutton was a part of the team over at Easton before he purchased Race Face, so he isn't a new face around the company, but the question is why did he buy it?

I can't see it for the bars & stem business, as Race Face is at least equal in quality and aftermarket share.
So here are my musings on why he bought it.

  1. Wheels. Race Face is getting into wheels, Easton has been building wheels for years and have their own factories and facilities.
  2. Patents. Easton may have a pool of Patents that have some value. I haven't researched what they have in their hat, but some rumours that I have heard that their portfolio are all older items.
  3. OEM sales. You to see more Easton products on complete bikes than Race Face. That does lead to better economies of scale at the factory level, perhaps bringing down their cost between the two brands.
  4. Roadie market. Easton makes a bunch of road products. Race Face doesn't.
  5. Value. The price might have been just too good to pass up.

Plenty of reasons for why to buy it, but at the end of the day it has to be a good value. None of the other reasons are compelling enough for it to be bought at X times earnings.

Obviously Chris Tutton has the funding in place to make some moves and it is great to see a company get moved to Canada, especially in our backyard. But we aren't talking about pocket change here. I wonder what else he has in his sights? I have a strange feeling that we haven't seen the last of the Tutton acquisitions.

 

Press Release...

Chris Tutton, President of Race Face Performance Products Ltd, has purchased Easton Cycling from newly named BRG Sports.
"I am elated by the outcome," says Tutton. "The Easton brand is synonymous with world class product and I am excited by the opportunity to renew the entrepreneurial roots of the brand and re-focus on technology, quality and service."
While Race Face and Easton Cycling now share a President, they will continue to operate as separate entities. A shared cost/service resource agreement will be implemented where deemed to be mutually beneficial to both brands. "The shared resources agreement will allow both companies to take precious resources spent on overhead and drive those dollars back into innovation in cycling" says Tutton.
Under Tutton, Easton Cycling will invest in an R&D Service Center, based in California, which will house wheel service, wheel testing and the Easton Engineering team. Under the shared resource agreement, the recently launched Race Face wheel program will also be developed and serviced from this facility. Easton Marketing will relocate to the Race Face head office in the greater Vancouver area of British Columbia; hiring announcements to follow shortly. Easton Global Sales and Customer Service departments will also relocate to the BC office.
"The team at Race Face is very excited to welcome Easton to the RF family" says Tutton. "The core competencies of both companies will help to strengthen and expand both business units. There are also undeniable synergies in sales and distribution to be realized worldwide as well as wins with off-shore vendor production networks currently in place.