A heterogeneous mix of bicycle brands is for sale because their parent company is insolvent: This conglomerate, the family business Prophete, offers the low-price bikes of the same name, which can be bought in discounters such as Aldi and hardware stores.

On the other hand, through its subsidiary Cycle Union, it manages the specialist retail brands Kreidler, Rabeneick and, as the image icing on the cake, VSF Fahrradmanufaktur.

In the cyclist forums of the Internet, in which users can be quite snobbish, people turn up their noses at bikes like prophets, and click their tongues at those like VSF.

Klaus Max Smolka

Editor in Business.

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Now the Prophete Group is going into an emergency sale, having just filed for bankruptcy.

New owners should come on board quickly: "The sales process should be completed by the end of February 2023," said the provisional insolvency administrator Manuel Sack.

He had "initiated a structured international investor process" and several parties had expressed interest.

The auditing company PwC accompanied the sale with its experts for distressed companies.

In the next few days, the international market will be addressed and initial talks will be held with investors.

Two months is very short for such a process.

Sparkling wine and seltzer under one roof

When the Prophete bankruptcy became known between Christmas and New Year, even many bike connoisseurs may not have been aware of the extent at first.

It is not common knowledge that the group also covers the middle to upper segment in addition to the low-price products of the same name - even if brand conglomerates are not uncommon in the bicycle industry.

Derby Cycle briefly went public on the Frankfurt Stock Exchange more than a decade ago with brands such as Kalkhoff and Focus, soon after that the company became part of the Dutch company Pon, recently renamed Kalkhoff by the way.

The Dutch conglomerate Accell – recently owned by the financial investor KKR – includes, among other things, the Dutch bikes from Batavus and Sparta, the brands Winora, Raleigh and Haibike as well as Babboe cargo bikes.

In the case of the Prophete, which is more than 100 years old, the spread in the price segment is striking: in 1988 the company from Rheda-Wiedenbrück took over Kreidler, in 1999 Rabeneick, shortly afterwards VSF Fahrradmanufaktur with the alternative image.

Contrary to what the name suggests, VSF is not largely purely manual work on a single assembly stand.

But the image is clear: the manufacturer describes itself as "part of a lifestyle based on value retention and a sense of responsibility".

An e-offshoot called E-bike Manufaktur emerged from it as the fourth Cycle Union brand.

Overflowing warehouses and financial risks

Nothing is officially known about the reasons for the bankruptcy.

There are rumors in industry circles that warehouses are too full.

The bike industry as a whole suffers from high freight costs and being unable to meet demand due to disrupted supply chains.

This is also mentioned in the most recently published annual financial statements (as of September 2021) of Prophete GmbH & Co. KG, which includes business with the Prophete brand - without Cycle Union.

At the time in January 2022, the management considered the business situation to be “good”.

For 2021/22, she forecast 15 percent more sales compared to the 101 million euros of the previous year and a net profit in the single-digit million range.

Equity was estimated at 12 percent.

The report, also signed in January 2022, lists “financial risks with a significant impact on the company’s net assets, financial position and results of operations”.

They exist if a contractual reason for terminating the financing agreements is met - namely if the company does not comply with the defined "covenants";

these are typically targets for specific indicators.