CPE News (2/16/2021) – Dorel Industries Inc. (TSX: DII.B, DII.A) has terminated the proposed going-private transaction with Cerberus Capital Management, L.P. by mutual agreement.
On November 12, 2020, Dorel Industries entered into a definitive arrangement agreement with purchaser 9428-4502 Québec inc., an affiliate of funds managed by Cerberus Capital, pursuant to which 9428-4502 Québec will acquire all of Dorel’s issued and outstanding Class A Multiple Voting Shares and Class B Subordinate Voting Shares dor CDN $14.50 per share in cash,, except for an aggregate of 4,009,410 Class A Multiple Voting Shares and 2,573,503 Class B Subordinate Voting Shares (Rollover Shares) owned by Martin Schwartz, Alan Schwartz, Jeffrey Schwartz, Jeff Segel and members of their immediate families (Family Shareholders).
The original agreement valued Dorel’s equity at approximately CDN $486 million or $390 million to minority shareholders.
On January 31, 2021, Cerberus Capital increased the purchase price to CDN $16.00 per share, valuing Dorel’s equity at CDN $520 million.
Dorel’s notable institutional investors include Fidelity Management & Research Company LLC, Letko, Brosseau & Associates Inc. and Foyston, Gordon & Payne Inc.
Letko, Brosseau & Associates has been opposing against the initial and the amended proposal.
Dorel is set to hold a special meeting to approve the arrangement on February 16, 2021. Dorel said the termination of the agreement follows exchanges and discussions between Dorel and many of its shareholders and review by Dorel of proxy votes submitted prior to the deadline of 5 p.m. (eastern time) on Friday, February 12, 2021.
As part of the revised agreement, Dorel is to pay $15.6 million in termination fees to Cyberus Capital.
Dorel Industries operates three distinct businesses in home products, juvenile products and bicycles. Dorel employs approximately 8,000 people in 25 countries.
“Independent shareholders have clearly expressed their confidence in Dorel’s future and the greater potential for Dorel as a public entity. We sincerely appreciate the considerable time and effort Cerberus has devoted to this project. I thank our employees who have maintained an unwavering focus on Dorel’s operations throughout this period. Shareholder value enhancement remains our top priority and we look forward to continued growth with our excellent brands, worldwide consumer recognition and strong customer relations,” stated Dorel President and CEO, Martin Schwartz.
photo credit: Dorel
News Release
Dorel Announces Termination of Going-Private Transaction
Montréal, February 15, 2021 – Dorel Industries Inc. (TSX: DII.B, DII.A) (“Dorel”) announces that the arrangement agreement dated November 12, 2020, as amended on January 31, 2021 (the “Arrangement Agreement”), between Dorel and an affiliate (the “Purchaser”) of funds managed by Cerberus Capital Management, L.P. has been terminated by mutual agreement of Dorel and the Purchaser.
As a result of the termination of the Arrangement Agreement, Dorel’s Board of Directors has cancelled the special meeting of shareholders to be held on Tuesday, February 16, 2021.
The Arrangement Agreement provided that a buyer group led by the Purchaser would acquire, for a purchase price of C$16.00 in cash per share, all of Dorel’s issued and outstanding Class A Multiple Voting Shares and Class B Subordinate Voting Shares, except for shares owned by Martin Schwartz, Alan Schwartz, Jeffrey Schwartz, Jeff Segel and certain members of their respective immediate families, by way of a statutory plan of arrangement under the Business Corporations Act (Québec).
The termination of the Arrangement Agreement follows exchanges and discussions between Dorel and many of its shareholders and review by Dorel of proxy votes submitted prior to the deadline of 5 p.m. (eastern time) on Friday, February 12, 2021. The termination of the Arrangement Agreement was unanimously approved by the Board of Directors of Dorel (with Martin Schwartz, Alan Schwartz, Jeffrey Schwartz and Jeff Segel having recused themselves), acting on the unanimous recommendation of the Special Committee comprised of Dorel’s six independent directors.
“Independent shareholders have clearly expressed their confidence in Dorel’s future and the greater potential for Dorel as a public entity. We sincerely appreciate the considerable time and effort Cerberus has devoted to this project. I thank our employees who have maintained an unwavering focus on Dorel’s operations throughout this period. Shareholder value enhancement remains our top priority and we look forward to continued growth with our excellent brands, worldwide consumer recognition and strong customer relations,” stated Dorel President and CEO, Martin Schwartz.
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.