Dorel has canceled a proposed buy-out that would have taken it off the stock exchange just a day before it was due to happen following obstruction from major shareholders.
Dorel, the parent company of GT, Cannondale, Mongoose and more, was founded and went public in 1987 following a merger of Dorel Co. Ltd and Ridgewood Industries, a flat-pack furniture company. We reported in November last year
that, after beginning its search for a partner for potential privatization in December 2019, it had reached an agreement in principle to return to being a private business following an agreement with a buyer group led by Cerberus Capital Management.
However, the non-binding proposal fell through after discussions between Dorel and its shareholders as well as a review of proxy votes that were submitted before deadline last Friday. The purchasing group initially caught wind of the opposition to the deal earlier in the month and raised its offer
by 10.3% from C$14.50 per share to C$16.00 per share, which pushed the transaction above the mid-point of the range for the fair market value, but it was not enough to convince the independent shareholders.
According to a bike-eu report
, shares in Dorel have surged following the bike boom and it led to the shareholders labelling the revised deal as, "opportunistic... significantly undervalu[ing] the company” and "bad for investors". The termination of the Arrangement Agreement was unanimously approved by the Board of Directors of Dorel yesterday.
More info can be found in Dorel's press release, here