Posted by Editor on 02/4/08
Dorel Acquires Cannondale Bicycle Corp.
Courtesy Dorel Industries
Dorel Industries Ltd. (TSX: DII.A, DII.B;) today announced it has acquired the Cannondale Bicycle Corporation, a leading designer, developer and manufacturer of high-end bicycles. Headquartered in Bethel, Connecticut, Cannondale has facilities in Bedford, Pennsylvania as well as offices in Canada, Switzerland, Holland, Japan, and Australia. Widely regarded as the bike industry's leading innovator, Cannondale's handcrafted bicycles have won numerous design awards and are sold in over 70 countries. The purchase also includes Sugoi Performance Apparel. Sugoi products are used worldwide by runners, cyclists, triathletes and fitness enthusiasts who demand the best apparel available.
The total value of the all-cash transaction will be US$190 to US$200 million, subject to Cannondale's earnings results for the year ending June 30, 2008. The transaction, which will be immediately accretive to Dorel's earnings, is being financed through debt. Cannondale and Sugoi are being purchased from an affiliate of Pegasus Capital Advisors, which acquired the company in 2003. 2007 sales for Cannondale and Sugoi were approximately $200 million.
A clear strategy for the IBD category
Dorel President and CEO, Martin Schwartz stated that in light of the acquisition the Company's Recreational/Leisure segment is being split into two distinct operating divisions. A new Dorel Independent Bicycle Dealers (IBD) division, the Cannondale Sports Group, is being created and will focus exclusively on this category with premium-oriented brands. Backed by Dorel's extensive resources, the Cannondale Sports Group will build on Cannondale's strengths to grow significantly within the IBD channel. "Our intention is to build a world-class company that dealers will want to buy from," said Mr. Schwartz.
Pacific Cycle will become a stand-alone division with an exclusive focus on mass merchant customers.
"The Cannondale purchase is consistent with Dorel's plan to concentrate on its core businesses. Since buying Pacific Cycle [Schwinn, Mongoose, GT brands] in 2004 we have learned a great deal about the bicycle industry and have found it to be a true value driver for Dorel. We are committed to pursuing this sector, and this important transaction will position us globally in a most material way. Dorel recognizes the importance and potential of the Independent Bicycle Dealer channel and is purchasing Cannondale as the first step to become the world's number one IBD player. Cannondale will be the crown jewel of this new Dorel division, which will seek additional such growth opportunities."
Note: Please refer to the separate release below: "Dorel Creates IBD and Mass Bike Divisions".
"We're excited about the future for Cannondale and our retailers. Cannondale's goal is to be the number one supplier to the IBD channel. Dorel's vast resources and experience provide us with long term stability and the ability to accelerate our goals for growth with our retailers," stated Matt Mannelly, President and CEO of Cannondale.
A history of innovation, a record of wins
Cannondale has come a long way since its establishment in 1971, when it introduced the cycling industry's first bicycle trailer. The company grew quickly, adding cycling apparel and accessory lines while earning a strong reputation for innovation and quality. Cannondale raised the cycling world's eyebrows by equipping its bicycles with handcrafted aluminum frames that were both lighter and more flex-resistant than the steel models that dominated the industry at the time.
Many of the ideas that keep Cannondale products on the cutting edge come from the sponsored athletes on the Company's professional racing teams. Cannondale has an outstanding heritage in competitive cycling and has consistently been on the leading edge of sports marketing. Cannondale bikes have been powered to multiple stage wins in the Tour De France and have won 4 overall Giro d'Italia titles alongside countless World Cup Wins and World Championship titles off road. Today Cannondale continues to push the envelope in bicycle innovation and material expertise and is the bike of choice for the Liquigas Pro Cycling Team, Cannondale Vredestein professional mountain bike team, along with mountain bike legend Tinker Juarez and a host of other world class professional cyclists and triathletes.
Mr. Schwartz stated that Dorel's Recreational/Leisure segment has an enormous opportunity to capitalize on the changing mindsets and trends around the world. "Increasingly, people are actively engaged in seeking healthier lifestyles; are concerned about the environment, and want to do something about it; and desire sustainability at all levels. We sincerely believe our products can help meet these objectives. This transaction underlines our plan to further unlock value within the Company, concentrating on the Recreational/Leisure and Juvenile segments which provide the greatest potential."
Dorel Industries (TSX: DII.B, DII.A) is a global consumer products company engaged in the designing, manufacturing and marketing of a diverse portfolio of powerful consumer brands, sold through its Juvenile, Recreational/Leisure and Home Furnishings segments. Headquartered in Montreal and with significant operations in the United States and Europe, Dorel employs approximately 4,700 people in 15 countries. Annual sales are US$1.8 billion and are made in over 60 countries worldwide.
3 US operations include Dorel Juvenile Group, which markets the Cosco and Safety 1st brands as well as Eddie Bauer and Disney Baby licensed products; Pacific Cycle, which markets several brands including Schwinn, Mongoose, GT, InSTEP, Playsafe and Roadmaster; and Ameriwood Industries, which markets ready-to-assemble furniture products under the Ameriwood, Carina, SystemBuild, Altra Furniture and Ridgewood brands; Cosco Home & Office, which markets home/office products under the Cosco brand and Samsonite license as well as home healthcare products under the Cosco Ability Essentials and Adepta brands. In Canada, Dorel operates Dorel Distribution Canada, Ridgewood Industries and Dorel Home Products. Dorel Europe markets juvenile products throughout Europe, under the BÃƒÂ©bÃƒÂ© Confort, Maxi-Cosi, Quinny, Safety 1st, BabidÃƒÂ©al, Mon BÃƒÂ©bÃƒÂ© and Baby Relax brands. Dorel Asia sources and imports home furnishings products. Dorel is the majority owner of In Good Care (IGC), a manufacturer and distributor of juvenile products in Australia, whose two principal brands are Bertini and Mother's Choice. Dorel also has eight offices in China, headquartered in Shanghai, which oversee the sourcing, engineering and logistics of the Company's Asian supplier chain.
Founded in 1971, Cannondale is a global designer, developer and manufacturer of high performance bicycles apparel and accessories. With a strong reputation for continuous innovation and quality the company is headquartered in Bethel, Connecticut, USA with offices in Canada, Holland, Japan, Switzerland, Australia, and a manufacturing facility in Bedford, Pennsylvania.
Dorel Creates IBD and Mass Bike Divisions
Courtesy Dorel Industries
Dorel Industries Ltd. (TSX: DII.A, DII.B;) today announced it is re-organizing its Recreational/Leisure segment to create two distinct bicycle divisions to deal separately with the Independent Bicycle Dealer (IBD) and mass merchant channels. The changes are being made to coincide with today's announced acquisition of the Bethel, Connecticut-based Cannondale Bicycle Corporation. The purchase also includes the Sugoi Performance Apparel Company.
A new Dorel Independent Bicycle Dealer (IBD) Division, the Cannondale Sports Group, is being established and will devote all of its energies and resources exclusively to this channel. The Cannondale Sports Group will encompass Cannondale, Sugoi, GT and other premium-oriented brands, and will seek acquisitions in similar high quality, performance bicycle companies. Jeff Frehner, who has been President of Pacific Cycle for three years is leaving that position immediately to return to his roots in the bike business and will oversee the Cannondale Sports Group as President. The current Cannondale management team, headed by President and CEO, Matt Mannelly, will continue to run Cannondale within that group.
"I'm a diehard biking enthusiast. I love this space and am thrilled to be able to focus all of my energy on the IBD channel. With Cannondale and Dorel's resources, the sky is the limit. High quality, innovation and passion, this will be the DNA of our new division," said Jeff.
"This is an excellent strategic fit for Cannondale and a testament to all the hard work of Cannondale employees worldwide. This provides us with tremendous resources to continue to build our innovative brand. It also creates long term stability that will help us achieve our leadership goals in the IBD channel. We're excited to be the leading brand in Dorel's new IBD division. The end result will be a continuous flow of innovative product to our Dealers and consumers," commented Matt.
"Dorel recognizes that doing business with the IBD and mass merchant categories is two very different things and requires distinct strategies and specialized people selling the best products for those channels. We clearly realize this and are making the necessary adjustments to best meet the needs of our customers," stated Dorel President and CEO, Martin Schwartz.
Pacific Cycle, purchased by Dorel in 2004, will now be a stand-alone division focused on the mass merchant channel. Alice Tillett, who has been Executive Vice President, Mass and Sporting Goods Channel at Pacific Cycle, has been named President. With 18 years experience in the sector, 10 of those in the bike industry, Alice has a thorough knowledge of the mass and sporting goods sector and has engineered Pacific's growth in this channel.
Mr. Schwartz said the Cannondale transaction underlines the Company's plan to further unlock shareholder value by concentrating on Dorel's core Recreational/Leisure and Juvenile segments, which provide the greatest potential. "We are committed to pursuing this strategy, and this important transaction positions us globally in a most material way. Dorel recognizes the importance and potential of the Independent Bicycle Dealer channel and is purchasing Cannondale as the first step to become the world's number one IBD player."
|Return to Canadian Cyclist homepage | Back to Top|