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by R J Katz (1993)
In 1970 Electronic Industries was purchased by Philips. The sale included the General Accessories business, the Malvern Star brand name and the organisation that supported it. Philips are a major Dutch-based multinational and are not related to the Philips Bicycle Company from England. Bicycles did not fit within the core business strategy of Philips and Malvern Star was sold to Raleigh, the British manufacturer, in 1980. At that time the industry was riding the crest of the BMX wave and strong profits were flowing from the business. Philips sold at a good time.
Raleigh's UK parent went through a number of hands and changes in direction thereafter. In Australia it had purchased the bicycle business of the Hanimex corporation which had two principal brands; Bennett, a specialist dealer product; and Cyclops which had been focused mainly at the mass merchant market. The purchase of Malvern Star gave Raleigh a major share of the Australian bicycle market. However, problems started to emerge in the Raleigh operation both at the parent level and locally by 1987. This saw the sale of the worldwide Raleigh business by its then owner, TI PLC, to Derby PLC. In 1988 Derby sold the Australian operations, including Malvern Star and the various brand names it had acquired over the years, in order to concentrate on its successful businesses in the UK and Europe, where it maintained the leading brand (Gazella) of bicycle in the very large Dutch market.
The purchaser of Derby's Australian bicycle business was Pacific Dunlop Limited. At the beginning of 1992, the South Pacific Cycles brand names were also acquired and folded into the Malvern Star business. As a result of these various takeovers, Pacific Dunlop, through Malvern Star, controlled; Speedwell, Cyclops, Bennett, Graecross, Peugeot and Raleigh brands, as well as Malvern Star.
Another major Australian name historically associated with bicycles is Repco. Repco's primary business is in the automotive parts area but it has long been a rival to Malvern Star in the Australian bicycle market. Repco was a listed company on the Australian stock exchange up until the days of leveraged buyouts and entrepreneurs in the mid 1980's. At that time it was acquired by Ariadne Corporation, led by Bruce Judge. Ariadne soon started to get into problems as a result of its rapid debt financed expansion. The 1987 stock market crash saw Ariadne's problems escalate and by 1988, within a month of acquiring Malvern Star, Pacific Dunlop was able to acquire the Repco Group, including its bicycle interests, at a distressed sale price.
Through the acquisition of Malvern Star and Repco, Pacific Dunlop acquired a strategic position in the bicycle market where in 1993 it controlled an estimated 60% of unit sales.
Rather than merge the Repco and Malvern Star operations, Pacific Dunlop adopted the approach of keeping them separate. The two entities had such a tradition of rivalry that it would no doubt have been difficult to merge them in, the short term. Furthermore, it would not have generated substantial cost savings or synergies given the fairly low overheads involved in running a bicycle wholesaling business. Initially, Pacific Dunlop articulated distinct market strategies for each of the businesses however they have ended up being in direct competition in a number of markets. The initial strategy involved Malvern Star concentrating on sales to the mass merchant market and at the lower to middle end of the specialist dealers market. Repco, on the other hand, was to position itself in the specialist dealers market above Malvern Star using the Repco brand together with Diamond Back and Merida at the top end. The two companies have tended to overlap in the very important middle range of the market. by Rolf Lunsmann (2000)
While these changes in corporate ownership were being played out the manufacturing arm of Malvern Star was fighting for its life against growing international competition. By the late 1980s the sad end arrived for the company's frame makers, painters, bike mechanics and many other staff.
Kim Fawkes chronicles the end of an era:
And so ended nearly ninety years of Australian production of Malvern Star bicycles. The new Malvern Stars and indeed the new Australian bicycle industry is one based on the concept of a Global Bike, built of components sourced from countries across the world and with parts assembled in many different cities. Even the computers that design the parts can now be located anywhere. It is a very different world to the one that Tom Finnigan would have known as he built the first Malvern Star in the back of his shop in Glenferrie Road Malvern. Ó Rolf Lunsmann, 2000 How you can help Feedback
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