Prophete and Cycle Union up for sale

BIELEFELD, Germany – The end has come for the bicycle production and trade consortium owned by the Prophete and Lönne families. The involvement of the Prophete family goes back to 1908 when the company was founded, while the Lönne family entered in 1970 to build a cycling business that is active worldwide.

Shortly before Christmas 2022, both Cycle Union and Prophete filed for ‘insolvency in self-administration’ . Now the appointed preliminary insolvency administrator, Manuel Sack of the law firm Brinkmann & Partner (B&P), has initiated a “structured international investor process with the consent of the preliminary creditors’ committee” Up for sale are the operational business activities of the insolvent operating companies, including Prophete GmbH & Co. KG in Rheda-Wiedenbrück and Cycle Union GmbH in Oldenburg, both in Germany. While Prophete is known as a leading supplier for the mass market, Cycle Union serves the IBD market with its brands E-Bike Manufaktur, VSF Fahrradmanufaktur, and Kreidler.

The announced insolvency immediately raised questions about the impact on the Eurosport DHS SA operations. Cycle Union also holds a 47.5% stake in the Romanian bicycle factory. Any fears have been quashed by CEO Tianqi Yang. “Even though Prophete Gmbh has been our main business partner since 2006, its bankruptcy doesn’t automatically lead to our insolvency thanks to our diverse customer portfolio,” he confirmed in January.

Not the first time

Prophete ran into difficult waters already in mid-2019. After some loss-making years, Cycle Union faced several challenges. On the one hand, there was volatile premium e-bike growth, but on the other hand, supply problems were triggered by the withdrawal of e-bike drivetrain supplier, Continental, on which Cycle Union fully relied. “These circumstances affected the company at a time when the management functions in purchasing, production and logistics were not or insufficiently staffed,” was noted at that time in the company statement.

The owner families Lönne and Prophete brought turnaround consultancy Struktur Management Partner GmbH on board. As part of the reorganisation, CFO Michael Dorin was taken on board at Prophete and Cycle Union. Two years later, in 2021, he took over as CEO. According to reports in the German media, the high inventories, in combination with insufficient assets, are the main reasons for the current insolvency of the group. Looking at the recent reorganisation in combination with the fact that the owner families have put their long-time business up for sale, it seems like Prophete and Cycle Union were not that financially strong. The European bicycle market faced a strong headwind in the second half of 2022 while stocks are