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Dorel Provides Update on Going-Private Transaction and Confirms Outlook

General News

Dorel Industries Inc. (“Dorel” or “we”) previously announced a plan of arrangement (the “Arrangement”) in which a buyer group (the “Buyer Group”) led by an affiliate (the “Purchaser”) of funds managed by Cerberus Capital Management, L.P. will acquire all of Dorel’s issued and outstanding shares, other than shares owned by Martin Schwartz, Alan Schwartz, Jeffrey Schwartz, Jeff Segel and certain members of their respective immediate families (collectively, the “Family Shareholders”), at a price of C$14.50 in cash per share (the “Consideration”).

The Consideration to be received by Dorel shareholders, other than the Family Shareholders (the “Public Shareholders”), represents a premium of:

– 233% to Dorel’s share price (C$4.35) on February 20, 2020, the date which preceded a five-day market correction related to the COVID-19 pandemic;

– 32% to the C$11.02 closing price of Dorel’s Class B Subordinate Voting Shares on the Toronto Stock Exchange (“TSX”) on September 4, 2020, the date on which the Buyer Group was granted exclusivity; and

– 19% to the 60-day volume weighted average trading price of Dorel’s Class B Subordinate Voting Shares on the TSX for the period ended October 30, 2020.

The Consideration is all cash, which provides Public Shareholders with certainty and immediate liquidity. By contrast, Dorel has historically experienced limited trading liquidity, which makes it difficult for Public Shareholders to realize meaningful liquidity through the public markets on which Dorel’s shares trade.

As Public Shareholders consider their vote on the Arrangement, Dorel would like to provide further clarification regarding certain elements of the Arrangement and confirm its previously-disclosed outlook.

The intent to privatize Dorel and the formation of a Special Committee to oversee the privatization process began before the COVID-19 pandemic. While Dorel’s business has benefited from tailwinds related to the COVID-19 pandemic in recent quarters, the environment ahead remains uncertain. The recent share price recovery and improved cash flow profile resulted in materially higher offers to purchase the shares of Dorel than were received at the outset of the privatization process in the spring of 2020 and to a significant premium compared to the trading price of Dorel’s shares prior to the COVID-19 pandemic.

As we disclosed on November 6, 2020 in our third quarter earnings press release, as we entered the fourth quarter, the visibility on earnings was more difficult and the then-expected second wave of the COVID-19 pandemic was beginning to have a significant impact, particularly in Europe. Since then, the second wave has spread to other markets, where it is also expected to have a significant impact. As we previously reported, the COVID-19 pandemic has adversely affected, and is expected to further adversely affect, global economies, which may have an adverse effect on our business.

In addition to these unknowns, all three of our segments are continuing to deal with known and increasing challenges, creating delays and incremental costs across the supply chain which we expect
will extend into 2021:

– A scarcity of container availability out of Asia is disrupting our supply chain and impacting our ability to satisfy customer demand, which remains strong for the Sports and Home segments. Critical shipments are being made at very high shipping rates while others are delayed, resulting in a material increase in container costs and negatively impacting our costs and profitability;

– The Chinese Yuan (“RMB”) has risen in value against the U.S. dollar by approximately 7% since July 1, 2020. With the majority of our supply being sourced from China and invoiced in U.S. dollars, this has resulted in price increases by our suppliers; and

– Bicycle and furniture factories in Asia, as well as their suppliers, are running at full capacity, further limiting our ability to negotiate pricing on our purchases.

We confirm the statement in our third quarter earnings press release that the fourth quarter will be challenging and that our fourth quarter adjusted operating profit will likely decrease to levels similar to those of the prior year’s fourth quarter. Further, we believe that the challenges we face in the fourth quarter will continue in the first quarter of 2021 and may continue thereafter.

The Consideration to be received by the Public Shareholders (C$14.50 in cash per share) is fair, supported by an independent formal valuation from TD Securities Inc. and fairness opinions from TD Securities and BMO Nesbitt Burns Inc. TD Securities concluded that the fair market value of the shares ranged from C$14.00 to C$17.00 per share, and not the fair market value range quoted by certain shareholders.

The shares held by the Family Shareholders will be exchanged for an indirect equity interest in the Purchaser which is based on an implied per share value of C$14.50, the same as the Consideration to be received by Public Shareholders. This equity interest represents, in the aggregate, approximately 26.7% of the common equity in the Purchaser immediately after the completion of the Arrangement and the issuance of additional debt and preferred stock to fund the Arrangement. The opportunity for the Family Shareholders to share in future profits above and beyond that percentage is available only in the event certain performance conditions are satisfied. There is no certainty this will occur.

The Board of Directors of Dorel, acting on the unanimous recommendation of the Special Committee, comprised of Dorel’s six independent directors, unanimously recommends that Public Shareholders vote FOR the Arrangement. Public Shareholders are encouraged to vote well before the deadline of 5:00 p.m. (eastern time) on Friday, January 8, 2021 and are urged to read Dorel’s management information circular dated December 3, 2020, which is available under Dorel’s profile on SEDAR at and on Dorel’s website at Information on the Arrangement, including updated FAQs and important documents, is also available at

Dorel shareholders with questions on how to vote should contact Kingsdale Advisors, Dorel’s strategic shareholder advisor and proxy solicitation agent, at 1-888-823-4343 (toll-free within North America) or at 1-416-867-2272 (outside of North America) or by email at


Kingsdale Advisors is acting as strategic shareholder and communications advisor to Dorel.

About Dorel Industries Inc.

Dorel Industries Inc. (TSX: DII.B, DII.A) is a global organization, operating three distinct businesses in juvenile products, bicycles and home products. Dorel’s strength lies in the diversity, innovation and quality of its products as well as the superiority of its brands. Dorel Juvenile’s powerfully branded products include global brands Maxi-Cosi, Quinny and Tiny Love, complemented by regional brands such as Safety 1st, Bébé Confort, Cosco and Infanti. Dorel Sports brands include Cannondale, Schwinn, GT, Mongoose, Caloi and IronHorse. Dorel Home, with its comprehensive e-commerce platform, markets a wide assortment of domestically produced and imported furniture. Dorel has annual sales of US $2.6 billion and employs approximately 8,000 people in facilities located in 25 countries worldwide.


Ian Robertson – Dorel Media – Kingsdale Advisors – – (416) 867-2333

Source: Dorel Industries Inc.