Dorel Industries has reached an agreement in principle to return to being a private business following an agreement with a buyer group led by Cerberus Capital Management and its current 'Family Shareholders' - Martin Schwartz, Jeffrey Schwartz, Alan Schwartz and Jeff Segel.
Dorel, the parent company of GT, Cannondale, Mongoose and more
, was founded and went public in 1987 following a merger of Dorel Co. Ltd., a juvenile products company founded by Leo Schwartz in 1962, and Ridgewood Industries, a flat-pack furniture company established by Martin Schwartz, Jeff Segel and Alan Schwartz in 1969.
The Cerberus Capital Group's current investment portfolio includes more than 40 companies around the world across a wide variety of industries. It is apparently in exclusive discussions to purchase all Dorel shares for C$14.50 per share in cash except those held by the founders of the brand. This would leave the Family Shareholders approximately 19.18% of Dorel’s outstanding shares on an economic basis and 60.17% on a voting basis.
In a letter seen by Bicycle Retailer and Industry News
that was sent to Dorel customers, Martin Schwarz explains that, "As a private company our shares will no longer be publicly traded on the stock exchange. We will have the liberty to pursue new opportunities faster, free from constant market scrutiny,"
with the "increased flexibility afforded to a private enterprise".
The letter goes on to reassure recipients that the aim of the transaction is to grow Dorel with increased access to capital and that there are no financial concerns for the business.
Dorel began its search for a partner for potential privatization in December 2019. 25 potential partners were considered and on September 4, 2020 the Family Shareholders granted exclusivity to Cerberus to complete due diligence and negotiate terms for the proposed privatization.
The non-binding proposal is subject to Dorel and the Buyer Group entering into a definitive agreement, which will require shareholder, regulatory and court approvals, including approval by a majority of votes cast by Dorel’s minority shareholders. More information can be found in Dorel's press release, here