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Financials

UPDATE 1-Germany's Canyon for sale as pandemic pushes cycling, sources say

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FRANKFURT, Oct 21 (Reuters) - German bicycle maker Canyon is for sale as founder Roman Arnold and minority stakeholder TSG Consumer Partners seek to tap into demand spurred by the pandemic, three people close to the matter said.

Investment banking boutique Baird last week sent out information packages to prospective private equity bidders, including KKR, Ardian, Partners, Permira and General Atlantic, the people said, asking not to be named.

Buyout group TSG Consumer Partners has put its minority position up for sale, while the founder Roman Arnold is also offering shares, giving any buyer the possibility of acquiring a majority in the firm, the people said.

Canyon and TSG had no immediate comment and Baird declined to comment.

As COVID-19 has encouraged people to use bicycles more for exercise and to avoid public transport, Germany saw a 9.2% rise in bicycle sales in the first half of the year, industry group ZIV said last month.

Following the sales increase, Canyon is expecting to post earnings before interest, tax, depreciation and amortisation of 54 million euros ($64 million) this year.

Listed Asian peers, such as Giant and Merida , are trading at 15 and 29 times their expected core earnings.

Canyon could be valued at about 15 times its core earnings or about 800 million euros ($948 million), including debt, one of the people said.

The company, founded in 1985 as a bicycle retailer, started producing Canyon-branded bikes in 1996 and TSG bought a minority stake in 2016, enabling an expansion of Canyon into the United States. (Reporting by Arno Schuetze; Editing by Tom Sims and Barbara Lewis)

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