Strategic acquisition to reinforce supply chain and increase competitiveness
TSX: DII.B, DII.A
MONTREAL, Nov. 3, 2014 /CNW Telbec/ - Dorel Industries Inc. (TSX: DII.B, DII.A) today announced it has completed its previously-announced acquisition of the juvenile business of Hong Kong-based Lerado Group, one of the largest juvenile product manufacturers in China. The purchase price was HK$930 million (US$120 million) and has been funded from the proceeds of its successful offering of US$120 million of extendible convertible unsecured subordinated debentures. With the closing of the transaction, the maturity date of the Debentures is automatically extended to November 30, 2019. Lerado Group is a subsidiary of Lerado Group (Holding) Company Limited, a publicly traded company listed on the Hong Kong Stock Exchange, specializing in the design and manufacture of a wide range of infant and juvenile products.
"This acquisition will improve Dorel Juvenile's value chain and is a sound investment in our future," commented Dorel President & CEO, Martin Schwartz. "Lerado Juvenile will ensure that we continue to further grow our industry leadership and it will augment profitability within the second year of operations.
"We have had a transition team in place in China since shortly after the transaction was announced in June, headed by a seasoned industry veteran from Asia who now becomes responsible for all operations. The production of several products has already been shifted to Lerado from other suppliers."
Some of the benefits of the transaction include:
- Going forward Dorel will control its own destiny, allowing it to be more flexible in an increasingly changing competitive landscape and delivering product to market faster.
- It vertically integrates production capabilities.
- Supply chain management is further strengthened as supplier dependency is reduced.
- Providing a platform for enhanced profitability
- R&D expertise is further expanded
- The acquisition will also accelerate Dorel's plans to grow in the Asian domestic market, an opportunity which, thus far, has been under-developed.
The purchase provides Dorel with its first company-owned factories in Asia and includes four extensive, modern facilities. The factories are based in China and there is an extensive R&D centre in Taiwan, the total assets encompassing over 2.5 million square feet of modern resources.
"These new facilities will complement our existing facilities worldwide and will allow us to best service Dorel's existing customer base. We also look forward to continuing to supply Lerado Juvenile's current customers at a service level that they have come to expect," concluded Mr. Schwartz.
Dorel Industries Inc. (TSX: DII.B, DII.A) is a world class juvenile products and bicycle company. Dorel creates style and excitement in equal measure to safety, quality and value. The Company's lifestyle leadership position is pronounced in both its Juvenile and Bicycle categories with an array of trend-setting products. Dorel's powerfully branded products include global juvenile brands Safety 1st, Quinny, Maxi-Cosi, Bébé Confort and Tiny Love, complemented by regional brands such as Cosco and Infanti. In Recreational/Leisure, brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI. Dorel's Home Furnishings segment markets a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel has annual sales of US$2.4 billion and with the addition of Lerado Juvenile, now employs approximately 10,500 people in facilities located in twenty-five countries worldwide.
Caution Regarding Forward Looking Statements
Certain statements included in this press release may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. Except as may be required by Canadian securities laws, Dorel does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties and are based on several assumptions which give rise to the possibility that actual results could differ materially from Dorel's expectations expressed in or implied by such forward-looking statements and that the objectives, plans, strategic priorities and business outlook may not be achieved. As a result, Dorel cannot guarantee that any forward-looking statement will materialize, or if any of them do, what benefits Dorel will derive from them. Forward-looking statements are provided in this press release for the purpose of giving information about Management's current expectations and plans and allowing investors and others to get a better understanding of Dorel's operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose.
Forward-looking statements made in this press release are based on a number of assumptions that Dorel believed were reasonable on the day it made the forward-looking statements. Factors that could cause actual results to differ materially from Dorel's expectations expressed in or implied by the forward-looking statements include: general economic conditions; changes in product costs and supply channels; foreign currency fluctuations; customer and credit risk, including the concentration of revenues with few customers; costs associated with product liability; changes in income tax legislation or the interpretation or application of those rules; the continued ability to develop products and support brand names; changes in the regulatory environment; continued access to capital resources and the related costs of borrowing; changes in assumptions in the valuation of goodwill and other intangible assets; and there being no certainty that Dorel's current dividend policy will be maintained. These and other risk factors that could cause actual results to differ materially from expectations expressed in or implied by the forward-looking statements are discussed in Dorel's annual Management Discussion and Analysis and Annual Information Form filed with the applicable Canadian securities regulatory authorities. The risk factors outlined in the previously-mentioned documents are specifically incorporated herein by reference.
Dorel cautions readers that the risks described above are not the only ones that could impact it. Additional risks and uncertainties not currently known to Dorel or that Dorel currently deems to be immaterial may also have a material adverse effect on Dorel's business, financial condition or results of operations. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
SOURCE: Dorel Industries Inc.
For further information: MaisonBrison Communications: Rick Leckner, (514) 731-0000; Dorel Industries Inc.: Jeffrey Schwartz, (514) 934-3034