Dorel Cancels Going Private Following Shareholder Votes

Feb 16, 2021
by James Smurthwaite  

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.

bigquotesIndependent 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.Martin Schwartz, Dorel President and CEO

More info can be found in Dorel's press release, here.


110 Comments

  • 91 2
 Glad to see they have their priorities straight

"Shareholder value enhancement remains our top priority"
  • 75 3
 The mantra that murdered the moral compass.
  • 45 16
 There's snark to your comment but companies are set up to act to maximize profit. In fact, directors of companies have a fiduciary duty to their shareholders. To not act in their best interest above all else would be to be in brach of their employment contracts. Expecting anything different is to invite a tiger into your house and then be mad at it when it eats your dog. Don't be mad at a tiger for doing tiger things.
  • 11 0
 @LA-Law: sad but true.
  • 28 0
 @LA-Law: I worked for company that gave $2500+ (average) every 6 months to every employee, based on $250,000,000 profits with 12% growth, to no raises, with fewer employees with $1,500,000,000 in profits. 3 months later they, layed us off, closed the building and moved to overseas production. Why? Because we had 13.2% growth over 3 quarters, not the forecasted 16.4% growth. Big business is UGLY!!
  • 27 5
 @oldschool43: For sure. Capitalism is ugly. It's ruthless. Its unyielding and uncaring.

That's my point.

You want them to do something for good for the sport or employees? Ha. Good luck asking the tiger to mind its table manners and purr.
  • 8 1
 @LA-Law: in the short term yes. Alienate your base by diluting brand, quality, and service, and there is no long term. Which they have done. Smile
  • 1 0
 @LA-Law: You're right. The tiger actually has better manners than the lion, but it still puts its elbow on the table and does not purr: www.youtube.com/watch?v=HNcmHt4IuUo
  • 6 0
 @mm732: Sure. But these a-holes are smart. Real smart. Relentlessly smart.

They did the math and decided that, "alienating their base" was better for business because the, "base" didn't buy enough bikes built, "the right way" to matter.

This is where the argument about privately-held companies with roots in the sport come in. People who forgo potential profit because it's better for the sport and the overall health of the hobby.

Santa Cruz.
Ibis.
Transition.
Red Bull.
Sram.

(Our beloved Fox is on the dark side here)
  • 1 1
 @LA-Law: Have to agree to disagree on this one.
  • 1 0
 @LA-Law:

Not everyone is understanding of the only true corporate goal. Increase Shareholder wealth.

Please do not confuse Shareholders with Stakeholders...As you are trying to convey LA-Law, they are not the same thing.
  • 5 0
 @LA-Law: you know that Santa Cruz Bicycles was sold to Pon Holdings, a family-owned Dutch conglomerate with a bicycle division including brands such as Cervélo, Focus and Royal Dutch Gazelle I’m 2015?
  • 2 0
 @BryanM0n: It is possible to have a balance. Just because you can save millions by dumping illegal toxic waste, knowing you would only have to pay hundreds of thousands in fines, doesn't mean you should, even if it does add to eps.
  • 2 0
 @BryanM0n: it isn’t the structure of corporatism, per se, but the value system that drives the majority shareholders.

B Corps are a prime example of measuring performance beyond shareholder returns.
  • 1 0
 @LA-Law: I agree. The problem is so are all the alternatives humans have ever tried. When they attempt to be caring they end up picking winners and losers.
  • 2 0
 I agree not something anyone likes to see associated with their hobby, but not thinking about stuff like this is EXACTLY how you end up with weird situations like YT found its self in last year with their CEO. It's generally good to run the business like a business if you want it to stick around.
  • 1 0
 @mm732: They will reap the rewards while destroying the company and then bail out when things go bad to raid another soft target.
  • 1 0
 @casey79: You do understand that PON acts as a typical Rhineland investor rather than a Anglo-Saxon? There is a rather large difference in how both models value the stakeholders of a company.
  • 1 0
 @LA-Law: re "did the math". it's not something you can quantify. you can't scorecard long-term sentiment.

"foregoing profit" is a misnomer IMO. the "good guys" are simply taking the long view. the "bad guys" simply understand the cost of everything and the value of very little.
  • 3 0
 @LA-Law: It doesn't have to be that way. Well before Milton Friedman came along and declared the supremacy of profit, plenty of companies operated on serving a blended set of stakeholders, not just shareholders. Companies may need to be profitable, but pursuing profit at all costs is bad for society and, in the long run, bad for the company itself. People seem to be realizing how myopic Friedman and his lackeys were and how much damage they've done to humanity. I'm eager to see a return to stakeholder primacy.
  • 2 0
 @plyawn: Give any one species too much rope and they'll f it up. Roger Waters
  • 1 0
 @LA-Law:
red bull is healthy?
  • 59 4
 And after the pandemic share prices will decline and the shareholders will be begging for a buyout
  • 11 1
 if they're smart they sell now
  • 8 1
 @vhdh666: news flash, they rarely are.
  • 26 26
 what qualifies as "after the pandemic" exactly? We're already celebrating the year anniversary of "2 weeks to flatten the curve", and considering how weaponized the virus has become for certain political factions, especially those spearheaded by sleepy old men and pernicious race baiting ex-attorneys, I could see the "pandemic" reaching well into this year as well.
  • 10 10
 @TotalAmateur: name checks out
  • 5 6
 @freestyIAM: psssst, you're an amateur too Wink
  • 9 0
 @TotalAmateur: Hit with the ‘username checks out’ twice in a month.

That’s gotta hurt mate
  • 2 0
 @vhdh666: dont reddit it man
  • 1 1
 @TotalAmateur: butch, what else do you have to complain about? Frown
  • 3 0
 @vhdh666: HODL THE LINE!
  • 1 2
 @Waldon83: its like watching someone high five themselves for a "your mom" joke lool
  • 1 2
 @Lagr1980: this place is already turning into reddit with the amount of mindless consumerism and somewhat echo chamber of ideas.
  • 1 1
 @TotalAmateur: total echo chamber here! I wish everyone would just agree with me so I’m going to Parler and Qanon, where it’s not an echo chamber.
  • 2 1
 @cuban-b: trying to point out how stupid you perceive someones argument to be, by repeatedly making stupid comments in the hopes that they're funny enough to entertain your fellow group-thinkers and hopefully anger your opponents. Seeing as I'm not 12 and not really bothered by your idiocy, I'd have to say this is......SUPER INEFFECTIVE! Lol seriously though, I know you can't even come up with a rational thought but if you ever do I'd actually love to know what you think about the lockdowns and ensuing regulations. If you do think....
  • 1 3
 @TotalAmateur: wow, snowflake alert! It’s fun watching you lose your shit over this LOL
  • 2 2
 @TotalAmateur: and why do u have like 760 burner accounts? Hahaha tool
  • 1 1
 @cuban-b: i got locked out of my last one or two, happens pretty much anywhere I make an account. more curious as to why you're doing so much investigating on me? Weird. Not surprised you aren't able to come up with any kind of rational thought over just calling me a snowflake, which I guess you can't grasp the irony of either. lol. does the -b stand for beta? Prolly.
  • 1 0
 @TotalAmateur: lol why so angry
  • 1 2
 @cuban-b: you're still talking? guess you have no concept of embarrassment, good for you
  • 3 1
 @TotalAmateur: ah need a hug? Poor baby Smile
  • 1 2
 @cuban-b: lol dang you're really trying here huh?? keep going i'm loving how easy it is to get you to make an idiot of yourself. as they say, living in ur head rent free xoxo
  • 2 1
 @TotalAmateur: lol at you being triggered by me. Too much winning!
  • 1 2
 @cuban-b: is this triggering and winning for you? damn the bar must be lower than your iq
  • 3 1
 @TotalAmateur: oh cmon we’re just having fun here haha. What else do you have to complain about? We wanna hear more about what hurts your feelings Smile
  • 1 2
 @cuban-b: you're literally the only person who has clearly been butthurt and still desperately trying to get attention lol. Look at you downvoting my responses too, how petty lol XD XD
  • 3 1
 @TotalAmateur: says the guy triggered by pinkbikes “echo chamber” lol. Irony.
  • 4 1
 @cuban-b: i like your approach. Rather than not feeding the troll, you are going for troll indigestion via too much feeding. Novel.
  • 1 2
 @cuban-b: you're the only one saying anyone is triggered lol, love the other backup accounts upvoting your comments too, rich XD
  • 1 2
 @freestyIAM: you guys are adorable together! am I hearing wedding bells??
  • 1 2
 @cuban-b: so wouldnt that rationale mean you were triggered by my triggering?? So you're like the ultimate trigger simp in that case?? looool
  • 3 1
 @freestyIAM: you gotta treat trash like trash
  • 1 2
 @cuban-b: is that why you're so rude to your mother?
  • 36 1
 When you name your private equity group after a hell hound guarding the gates of Hades you are probably an a-hole. For the sake of the workers at these companies, I'm glad it failed.
  • 5 0
 Solid observation right there!
  • 5 28
flag nurseben (Feb 16, 2021 at 6:55) (Below Threshold)
 How did you get that from this little news blurb?

Making shite up based on some fantasy of bikr company abuse of their workers.

Do you feel the same when shop at Walmart/Target/Costco, thinking nothing of how their cheap stuff got so cheap.

You have no knowledge of how Dorel and it’s companies treat workers.
  • 9 2
 @nurseben: ahh shatup..
  • 15 0
 @nurseben: Veggiemotto was referring to the private equity / buyers, Cerberus Capital Management, not Dorel. Hence why "for the sake of workers at these companies (Dorel, the parent company of GT, Cannondale, Mongoose and more), they're glad the deal fell through. Which assumes the workers are currently treated better by Dorel than they would have ben otherwise by a private equity group named after a hell hound guarding the gates of Hades... which would be Cerberus.
  • 1 1
 I remember reading the same comment the last time something Cerberus related came up on PB probably a few years back.

Was it you? Lol
  • 1 0
 @nvranka: why does it matter
  • 29 0
 This stock peaked at $40CAD in 2017. It had halved in price prior to the pandemic and has pretty much recovered to factor in pandemic sales performance and any baseline growth. Considering the supply disruptions I suspect cycling companies are headed for (many durable goods are facing supply shocks) their worst year ever - there’s no inventory to sell for months.
  • 3 0
 That was what I was going to say!!
  • 2 0
 Question is who did see it coming soon enough to react early (last summer).
Some companies will struggle, sooner or later we will find out who that is.
  • 27 2
 I never realized there were so many successful day-traders trolling the Pinkbike comments
  • 19 0
 "Bro, do you even short sell?"
  • 8 0
 I’m big into the stonk market.
  • 3 0
 #dorelsqueeze !
  • 4 0
 If by successful day-trader you mean watcher of The Big Short then yes
  • 17 1
 GT, Cannondale and Mongoose. Three iconic brands and look at them. SMH
  • 20 4
 Capitalism sees craftsmanship and a base of enthusiast customers as ripe for exploitation and they have squeezed the whole industry to the point that only private equity is making money.
  • 7 20
flag nurseben (Feb 16, 2021 at 6:58) (Below Threshold)
 @Veggiemoto: once again, making the claim that somehow the consumer is not responsible for their consumption, blaming businesses for selling. You need to study mode.
  • 6 1
 Cannondale is making cool stuff lately. They have nice new road bikes after a decade of stagnation, their redesigned mountain bikes have performed well in Pinkbikes field tests as well. I seem to recall the Scalpel being the fastest XC race bike in their test.
  • 6 0
 @jordanaustino: it’s promising. GT bothers me more. Not even sure how it survives at this point.
  • 8 2
 @nurseben: It doesn't need to be one or the other. Preying on human weakness is not somehow validated by human's acting upon their worst instincts.
  • 4 0
 Every time I see SMH I think of the Sydney Morning Herald. What does that mean in internet speak?
  • 2 0
 @jaame: shake my head
  • 5 1
 Don't forget Schwinn and Iron Horse. Dorel owns those brands also. Along with Roadmaster, Pacific, and Murray bikes.
  • 7 0
 @jordanaustino: If I was this company I would focus Cannondale on road and XC and focus GT on enduro and DH so they'd have a distinct endurance brand and a distinct gravity brand, and then of course Mongoose as the budget brand.
  • 1 0
 @jaame: time to roll another..?
  • 1 0
 @Hpbike: horrible!
  • 1 0
 @dthomp325: absolutely
  • 1 0
 @jordanaustino: I thought it was So Much Hate. Good thing they are kind of interchangeable.
  • 14 0
 Dorcel pulls out ?
  • 14 0
 Catholic style.
  • 11 1
 @m1dg3t: Cannondale, GT, Mongoose are too old for any Catholic
  • 3 0
 Marc did!
  • 9 0
 There is a difference between Capitalism and greed. Corporate raiding is greed. Capitalism says anyone can put there money, skill, and time to good use and have a shot at financial success. Unfortunately, big success using the Capitalist system far to often ends up in greed. This says more about human nature than the inherent flaws of any economic system.
  • 3 0
 Well said
  • 7 0
 "Shareholder value enhancement remains our top priority " says the CEO. Sometimes this is the biggest issue.
  • 4 0
 Especially when it is short sited. If you aren't willing to create good products because it costs RD money in the short term, you will fail long term.
  • 4 0
 At a quick glance, I thought it was the previous model of the stumpy. I dig it better, though.
  • 4 2
 Dorel en chile administró super mal esas marcas, tambien despidió viejos trabajadores que sabian mucho de sus marcas y llevo mas a la ruina a sus tiendas... dorel solo sabe de como no manejar una tienda de bicis
  • 1 0
 Igual aquí en EEUU. GT paso de venderse en talleres de bicicleta a prácticamente supermercados. Cannondale esta un poco mejor pero no por mucho.
  • 4 3
 They struggle cause they make bikes that riders avoid . 3 brands that used to be dominant and sought after are now one step above Walmart and now struggle to make bikes people take seriously
  • 2 1
 Exactly! GT Zaskar, Cannondale m series used to be the most sought after bikes and now their stuff is garbage!
  • 3 2
 Their bikes ARE Walmart. That's why IBDs dropped the lines and their market share took a dive.
  • 2 0
 Do your research and look where your money is going when it's time to buy a new bike. There are plenty of smaller companies that haven't sold out to corporations yet.
  • 3 0
 They are also corporations... Making money is not bad and no one goes into business to lose.
  • 2 1
 I always thought when a company is "bought" the company should have to be re-named. That way people are not mislead into purchase.
  • 4 1
 * Shrugs *
  • 1 4
 Not that I'd ever consider any of their brands.

But just consider the amount of time and effort some people would have had to put it preparing to go public, only to have it rejected. Such a waste of people's time and money.

Was there no way of consulting the stakeholders beforehand to ensure they were behind this approach?

I'm not on about the senior executives, but some mid level and beyond just doing as they're told and wasting their time..
  • 2 0
 $dorel to the moon?
  • 3 0
 BUY AND HOLD BROTHER!!!!!
  • 3 0
 I just like the stonk.
  • 1 0
 2 gamestop or not 2 gamestop
  • 1 0
 dorel is more in the toilet paper business
  • 1 1
 The company that killed Iron Horse
  • 2 0
 Nope. IH was family-owned when it went down the tubes. They were making some great bikes at the time, with 6point and 7point models being well respected and every third bike at the Whistler park seemingly a Sunday. Overnight the staff was laid off, Sam Hill and Dave Weagle got screwed out of money owed them, and remaining stock was "sold" to a family-related LBS in Colorado. The owners liquidated everything they could and walked away.

Dorel just bought the smoking wreckage.

Not defending Dorel at all here, as they are in it only for the money.

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