The parent behind the Cycling Sports Group, Dorel, has announced its intention to privatise the business, removing shares from circulation on the stock exchange.
In order to achieve this, new partner Cerberus will purchase all outstanding shares aside from the Schwartz/Segel family shares, which will form a new entity. Cerebus will thereafter help the business to grow via renewed access to capital and offering the firm the flexibility of a private enterprise to stay agile in the marketplace.
The Family Shareholders currently own, directly or indirectly, or exercise control or direction over, an aggregate of 3,999,960 Class A Multiple Voting Shares and 2,231,639 Class B Subordinate Voting Shares, representing approximately 19.18% of Dorel’s outstanding shares on an economic basis and 60.17% on a voting basis. The Family Shareholders have advised the Special Committee that they are not interested in any alternative transaction, including the sale of their interests in Dorel or the sale of any of Dorel’s businesses segments or material assets.
“Our focus will be on building the company not cost cutting,” offers the statement from CEO Martin Schwartz put out last night. “To be clear, we are not selling Dorel and we are not doing this due to any financial concerns. Business is strong and our financial position is sound,” added the release.
Backed by approximately $54 billion in assets, Cerberus has the financial clout to back up the Dorel teams. It has been confirmed that all senior management will retain their roles in the transaction and no further changes are foreseen on staffing. “It will be business as usual with the dded benefit of Cerberus’ strong support and resources,” adds the statement.
The proposed privatisation of the business is now subject to all parties entering into a definitive agreement prior to shareholder, regulatory and court approvals. A special shareholders meeting has already cleared the move with minority shareholders.
The Buyer Group has submitted a non-binding proposal to acquire all of Dorel’s outstanding Class A Multiple Voting Shares and Class B Subordinate Voting Shares not currently held by the Family Shareholders and their immediate families at a price of C$14.50 per share.
The proposal price represents a 32% premium to the closing price of Dorel’s Class B Subordinate Voting Shares on the Toronto Stock Exchange on September 4, 2020, the date on which the Family Shareholders granted exclusivity to Cerberus, and for the periods ended Friday, October 30, 2020, a 19% premium to the 60-day volume weighted average trading price.
Dorel Sports is the parent to Cycling Sports Group. In 2009 it bought out the UK’s Hot Wheels business. Falling under the banner of the cycling portfolio are brands like Cannondale, GT, Fabric, Charge and Mongoose.