Brunswick Corp. has announced an agreement to acquire the Indoor Cycling Group (ICG), a German company that specializes in the design of indoor cycling equipment. The terms of the transaction were not disclosed. ICG has exclusive rights to the Wattrate Power Meter, a power meter for the fitness market, as well as other technologies that are expected to complement Life Fitness' technologies and capabilities. ICG has been the supplier of Life Fitness' existing group cycling bike for the past five years.
Brunswick's fitness equipment segment already includes Life Fitness, Cybex, Hammer Strength, and Scifit. ICG is Brunswick's second purchase in the fitness equipment sector this year, after the takeover of the Cybex brand for $195 million in January. Brunswick's stated goal is to double the size of its fitness operations by 2020.
ICG, based in Nuremberg, posted revenues of around €37 million in 2015. The acquisition by Brunswick is expected to close in the third quarter. Once approved, ICG would become part of Life Fitness' global operations. Bernd Puerschel, the founder and current chief executive of ICG, will continue to lead the brand, reporting to Life Fitness' president, Chris Clawson. ICG's management team, staff and operations are also supposed to remain largely intact.
According to Brunswick, the acquisition of ICG will have a minimal impact on Brunswick's 2016 results. Brunswick's fitness segment sales jumped by 32 percent to $229.8 million in the second quarter ended July 2, largely due to its recent acquisitions, which helped to boost U.S. sales by 45 percent. In the rest of the world, sales advanced by 19 percent, with good results in Europe and Asia.
Organic growth also posted a good performance, with a 12 percent rise compared with the same period a year ago, driven by strong sales to health clubs and the U.S. federal government. Operating earnings for the segment increased by only 4 percent to $24.1 million in the quarter due to acquisition costs, an unfavorable sales mix and initiatives intended to stimulate growth.
As a group, Brunswick saw its quarterly net income decline by 8 percent to $109 million on 9 percent higher revenues of $1,242.2 million.
