Shareholder revolt reverses Dorel decision to go private

Dorel has cancelled its proposed bid to take the company private following a backlash from a significant portion of the group’s shareholders.

The Cannondale and GT parent made the announcement that it intended to remove the company from listed exchanges in November last year, a move that would have seen Cereberus purchase all outstanding shares, aside from those held by the Schwartz and Segel families.

The non-binding proposal proved unattractive to shareholders who raised complaints with Dorel about the offer. Votes cast on the motion submitted ahead of Friday’s deadline by independent shareholders cast doubt on the deal. This was despite a raise of the purchase price by 10.3%, an offer that would have seen each share purchased rise from C$14.50 per share to C$16.00 per share in value.

Understandably, with bike industry share prices rocketing and investor interest growing sharply, investors perceived the offer to fall short of a fair valuation of the business, which is diversified far beyond just the sale of cycling products.

Yesterday Dorel’s Board of Directors alerted shareholders to the decision to maintain a presence as a listed business, with CEO and President Martin Schwartz offering:

“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.”

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.