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Tuesday, 20 May 2014

Tucker Rocky / MAG "merger" deal completed

Tucker Rocky / MAG "merger" deal completed

Tucker Rocky / Biker’s Choice and Motorsport Aftermarket Group (MAG) have announced that their previously announced "merger" has now been completed.

As planned the combined company will operate under the MAG name, John. A. Lacy, President and CEO of Indianapolis based Lacy Diversified Industries (LDI, Ltd., the majority shareholder of the combined company) as the Chief Executive Officer.
Brian Etter will continue in his role as President of MAG’s "branded product, media and online retail operations," with Dan Courtney continuing as President of Tucker Rocky / Biker’s Choice.
The former MAG majority owner, the Los Angeles based equity investor Leonard Green & Partners and other "legacy MAG shareholders" as they are being described will retain a "significant minority interest in the combined company."
Best known as the owners of Vance & Hines, Performance Machine, Kuryakyn, Progressive Suspension, J&P Cycles and a number of other high profile specialist motorcycle industry parts and accessory brands, manufacturers, retailers and media outlets MAG is being toted as having "merged" with the Tucker Rocky/Biker's Choice operation.
However, industry talk of an arising likelihood that the deal implies some kind of upcoming 'integration' plan between the two aftermarket giants appears to be wide of the market.

J A Lacy is the fourth generation of his family to head up Indianapolis based Lacy Diversified Industries (LDI) and will become CEO of the combined company which will operate under the Motorsport Aftermarket Group name (MAG).

Following the retirement of Steve Johnson at the end of 2012 Dan Courtney became president of Tucker Rocky and will continue in that role following the merger

Brain Etter continues in his role as President of Motorsport Aftermarket Group (MAG) the parent company of well known parts and accessories brands such as Vance & Hines, Kuryakyn, Performance Machine, Progressive Suspension, J&P Cycles and UK based offroad specialist Renthall

The deal in fact appears to be a lot simpler at this stage, with Tucker Rocky's parent company LDI simply making a strategic acquisition which, in effect, sees them taking an ownership position as an alternate investor to Leonard Green & Partners or acquisition by some other equity investor.
It would appear that Leonard Green had decided that the interests of the investors in fund through which their ownership of MAG was held and funded would now be better served by realising value at this time, rather than continuing with its ownership.
In this context industry insiders are pointing to LDI as being an excellent ownership candidate for MAG as the company has both the resources and the pedigree to be a beneficial long-term owner of a power sports industry business, as proven by their established track record as owners of Tucker Rocky.
At the time that the plan was press released some seven weeks before this completion announcement LDI stated that it had "been a major participant in the power sports industry for 25 years through its ownership of Tucker Rocky/Biker’s Choice", and referenced their business ownership strategy as being one of "build and hold".
That said, rumors about consolidation and potential "merger" of operations were rife at the time, fuelled in part, it would appear, by LDI also stating that “long-term success for the company will be built by bringing enhanced selection, service and solutions to power sports dealers in order to drive retail sales growth.” A statement that appears to presage leveraging of  combined ownership and Tucker Rocky / Biker's Choice resources in a rather more "integrated" way than a simple investment holding company strategy might suggest.
While those rumours have died down since, and with all concerned remaining tight-lipped about details, there nonetheless is widespread relief that MAG ownership will reside "within" the industry and a growing sense that this particular chapter in the story of aftermarket consolidation brings opportunity for dealers with it.
At the time MAG Chairman, shareholder and original founding partner Arnie Ackerman was quoted as saying that “the strategic merit for this combination stems from the highly complementary product and service offerings of each of these businesses.”
Lacy Diversified is somewhat of an American institution, certainly an Indianapolis institution, owing its origins to a business founded there in 1912 by Howard Lacy. The Lacy Diversified name was adopted in 1972 to reflect the evolution of the group and now, 102 years since it was founded, it is still owned and operated by the Lacy family, with Andre Lacy as Chairman and his son, John A. Lacy, representing the fourth generation of the family to be involved in the ownership and operation of the group.
Famously, Tucker Rocky owes its origins to Texan Ed Tucker's 1967 wholesale motorcycle oil business and subsequent expansion and diversification following Bob Nickell's purchase of the business in 1972.
The business became Tucker Rocky (TR) in 1986 following the purchase of Rocky Cycle, and was acquired by Lacy Diversified Industries in 1989. NEMPCO, a specialist New England based Harley aftermarket parts business (founded in 1971 by Larry Coppola) was bought by Tucker Rocky in 1992 in order to give the group strength in a then fast developing custom parts industry that had already seen the emergence of several strong specialty distribution brands.
TR re-branded NEMPCO as Biker's Choice (itself a NEMPO own brand) in 1998; the business is a strictly wholesale operation that claims it sells over 100,000 products to all sectors of the motorcycle and wider power sports market, through seven domestic US distribution centers.
MAG was founded in 2000 by Arnie Ackerman and his partners in a San Francisco based equity investment fund managed by Duff Ackerman and Goodrich (DAG). The specific intention of the fund was to acquire, finance and develop leading motorcycle aftermarket parts and accessory brands and manufacturers.
As the man who had largely guided the acquisition strategy and driven development of the Group, Ackerman retained a shareholding in MAG in 2006 when DAG's interest was acquired by Leonard Green & Partners - a Los Angeles based equity investor with current involvements in well known consumer brands such as Petco, The Sports Authority, J Crew, Top Shop, Lucky Brand Jeans and the Palms Casino Resort in Las Vegas.
Though details are confidential it is being assumed that Ackerman and former MAG company owners such as Terry Vance, Byron Hines, Tom Rudd, Perry Sands, John Parham and others are among the "legacy" shareholders referred to by LDI, thus meaning, given the deal and holding company structure that has been announced, that they now, in effect, have a (albeit modest) stake in ownership of Tucker Rocky.