Bicycle helmet producers Bell Sports Corp. of Scottsdale, Ariz., and American Recreation Co. Holdings Inc. of Commack, N.Y., have announced they plan to merge. The companies had combined sales of about $270 million in the past fiscal year. American Recreation's strong presence in Canada's bicycle helmet market and in U.S. mass merchandising of bicycle accessories attracted Bell Sports' interest, according to Angelo Petrilli, Bell Sports' director of corporate finance.
Bell is an integrated producer of bicycle helmets using an expanded polystyrene foam inner core and plasticouter shell. Its main plant is in Rantoul, Ill., which supplies independent retailers and mass merchandisers. It also manufactures in Laroche, France, near Paris. It sources accessories from various outside suppliers.
American Recreation's major plant is in Granby, Quebec, near Montreal. It has a small plant in Memphis, Tenn., Petrilli said in a telephone interview.
American Recreation officials could not be reached for comment.
Petrilli said the two firms are studying potential plant consolidation but have reached no decision. American Recreation's Montreal plant has a dominant position in the Canadian market, where Bell Sports has had difficulty competing, he said.
Both firms' shares trade on the Nasdaq over-the-counter market. They expect to complete the merger by midyear. The deal includes converting each common share of American Recreation into 0.6224 shares of common stock of Bell Sports, subject to adjustments.
Bell Sports is the largest supplier of bicycle helmets in North America, according to an October report on the firm by Kemper Securities Group Inc.'s Chicago office. Bell also supplies auto racing and motorcycle helmets and bicycle accessories.
Bell Sports had sales of $116.1 million and profit of $10.5 million for the year ended June 30. Bicycle helmets represented 72 percent of sales, according to the Kemper report.
Petrilli said the company's sales for six months ended Dec. 31 were $47.3 million. Profit was $737,000. Financial results for the second half of the year will depend on how fast more states mandate bicycle helmets for children.
``This is a step-growth business dependent on legislation,'' Petrilli said.
He said first-half results were hurt by a surplus of bicycle helmets at retail stores. Pennsylvania recently mandated the use of bicycle helmets, but several other states have not acted as fast as the industry and retailers expected.
Bell Sports last fall considered acquiring bicycle helmet assembler Renaissance Marketing Inc. of East Brunswick, N.J., but decided not to proceed with it, Petrilli said. Privately held Renaissance was growing rapidly but had annual sales of less than $10 million, Kemper estimated.
