Zag Daily’s industry experts have responded to micromobility operator Bird’s acquisition of Spin with surprise, enthusiasm and a word of caution.
On Tuesday Bird Global announced its acquisition of Skinny Labs, operator of shared e-bike and e-scooter business Spin, from Tier Mobility for $19 million. The deal provides Spin with $10 million in upfront cash, $6 million in a vendor takeback and $3 million as a hold back.
“A smart win-win-win”
As the micromobility industry continues to grapple with financial setbacks, shared mobility providers in the US have taken measures to reduce costs. Bird, Lyft and Spin have all recently laid off employees and left markets.
Bird’s stock had been experiencing a sharp decline before this announcement, with its market capitalization briefly dipping below $9 million on Monday. In fact in Bird’s latest earnings report from 9 August, the operator discussed the possibility of downsizing or even bankruptcy, making this transaction a shock to many. To finance this endeavour, Bird borrowed $6 million in debt from MidCap Financial, putting up nearly all of its assets as collateral.
“This is a smart win-win-win for all parties,” Lars Christian Grødem-Olsen, an Advisor for Movability on new mobility and former Country Manager at Tier Mobility, told Zag.
“Bird’s stock price development since the acquisition speaks for itself. The sale gives Tier a great cash injection as it looks to achieve profitability, while EMEA is its real target area. Spin also has a great set of assets, which makes the acquisition especially valuable.”
Bird marks its territory
The acquisition makes Bird the largest micromobility operator in North America by market share. Spin’s fleet of over 60,000 vehicles in more than 50 North American cities means Bird now operates in 87% of the 50 most populous cities in the United States and Canada that have a shared micromobility programme.
Spin also benefits from a much greater scale by joining forces with a North American partner, according to Spin’s CEO Philip Reinckens.
“There is a higher level of synergies, greater efficiencies with regards to certain functions and systems vs a European partner,” he told Zag.
But having the largest fleet doesn’t necessarily make you the best company, according to Vivian Myrtetus, former Founding member of Spin en Español and Partner at Converge Public Strategies.
“The shared scooter industry continues to consolidate as companies are under financial pressure,” said Myrtetus. The devil is in the details and we will have to watch closely how the new Bird manages its permits and fleet as well as the bottom line.”
According to Grødem-Olsen, there are more challenges to come. “Bird has a very different business model than Spin, with external third party fleet managers and Spin having more of an internal approach. This factor makes the acquisition unexpected. It will be very interesting to follow the post-merger-integration over the next year.”
Industry consolidation in action
Myrtetus points out that Bird and Spin have permits in many of the same U.S markets.
“Regulators will closely review this consolidation to ensure fair competition,” she said. “They may deny multiple permits for the same company and I expect we will see a shift in operations with some markets consolidating.”
In response to this, Spin’s CEO told Zag: “That is something we are going to figure out with our city partners in the weeks to follow. Those discussions will benefit from the strength of Spin’s relationships with city partners. This acquisition is good for the industry and thus the cities.”
While many view this acquisition as evidence of the shared market consolidating, Scott Shepard, Head of Policy and Government Affairs of Drover AI, doesn’t see it that way.
He commented: “It’s not really a standard consolidation per se. Actually there’s minimal market overlap in the US. It’s more of a simple shift in majority ownership for Spin.
“Spin has gone from Ford to Tier to Bird just in the course of a few years, and this is counter to the 2023 micromobility M&A media narrative. I don’t feel that an organisational integration between Spin and Bird will be any more challenging than between Spin and Tier.”