Dorel selling bicycle business for US$810M; shares soar
BNN Bloomberg
Dorel Industries Inc. is selling its sports division to Dutch transportation conglomerate Pon Holdings B.V. for US$810 million as the Montreal-based company looks to reduce its debt load.
Dorel Industries Inc. is selling its sports division to Dutch transportation conglomerate Pon Holdings B.V. for US$810 million as the Montreal-based company looks to reduce its debt load.
The sale comes roughly six months after Cerberus Capital Management LP withdrew its plans to take Dorel private for $437 million after failing to receive enough shareholder support to complete the deal.
Demand for bicycles and bike parts has soared since the onset of the COVID-19 pandemic as more people take up cycling to improve their fitness. Revenue in Dorel's sports division rose 13.8 per cent in 2020 to $265.3 million, representing the biggest segment for the toy-and-bike maker.
"Dorel is committed to taking a disciplined approach to value creation as it sees significant upside in both its Home and Juvenile businesses and will look to replicate the success it has achieved with Dorel Sports to create additional value for shareholders," said Martin Schwartz, Dorel’s president and chief executive officer, in a statement Sunday.
The company expects the sale to Pon Holdings to close before the end of the first quarter of 2022. In addition to paying down debt, Dorel said it aims to use proceeds from the sale to return capital to shareholders and for general corporate purposes. After accounting for closing adjustments, Dorel said it anticipates US$735 million in net proceeds from the deal.
Meanwhile, Dorel said challenges in the container freight industry, as well as pandemic-related challenges including labour shortages, will force the company to reduce its outlook for its Home and Juvenile divisions. However, it did not provide details about the magnitude of those revisions. Dorel is scheduled to release quarterly results on Nov. 5.
