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Forever Bicycle's Parent Company to Acquire High-End Bicycle Brand "Factor" for Global Expansion

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                                                                                Photo From Forever Bicycles' Website

 

The parent company of Forever Bicycle has announced plans to acquire the high-end bicycle brand "Factor." The deal will involve both equity acquisition and capital increase, with the parties collectively holding 52.8% of Factor's shares.

Zhonglu Holdings, through its wholly-owned subsidiary Zhonglu Advantage Global Investment, plans to purchase 19.70% of Factor’s equity for $13.26 million and make a capital injection of $2 million. Following this transaction, Global Investment will hold 21.15% of Factor. Meanwhile, VSI plans to acquire 29.55% of Factor for $19.89 million and increase the company’s capital by $2 million, resulting in VSI owning 31.72% of Factor post-transaction.

According to Zhonglu Holdings, the investment in Factor aims to optimize resource integration and is in line with its strategic planning and current market conditions. The company's objective is to leverage Factor's established overseas sales network and marketing system to develop its own capability in creating top-notch carbon fiber bicycles, thereby expanding its presence in the high-end carbon fiber bicycle market.

The reasons behind Zhonglu’s acquisition of the overseas Factor brand include technology acquisition, channel development, and enhancing industrial chain synergies. Given the intense competition in the domestic bicycle industry, which has been adversely affected by market conditions and weak consumer demand, Zhonglu Holdings anticipates a net loss of between 21.25 million and 10.63 million yuan for the fiscal year 2024, according to earnings forecasts released on January 18.

To further expand its market share, Zhonglu Holdings has structured a diversified online and offline marketing network that has increased sales expenses. The company has also intensified marketing investments in its trendy brands, "NINETEEN FORTY" and "FOREVER BLU," aimed at boosting influence among younger consumers. However, the 2024 semi-annual report did not detail the company’s performance or actual earnings in overseas markets.

Zhonglu Holdings emphasized that investing in Factor Bikes will allow for the extension and integration of the bicycle industry chain, including parts manufacturing, sales channels, and event operations, ultimately discovering new profit opportunities and striving for diversified revenue growth. The brand "Factor" plans to enhance its recognition through sponsorship of world tour cycling teams and professional cyclists, primarily selling through online platforms and dealers.

Through this investment, Zhonglu Holdings aims not only to develop its own capability in crafting world-class carbon fiber bicycles but also to utilize Factor's mature sales network and marketing system to facilitate the international expansion of Forever's high-end models.