Posted by Editoress on 08/22/13
Canadian-based multinational Dorel has added to its holdings in the bicycle division by purchasing a majority stake in Brazilian manufacturer Caloi. Dorel says that this now pushes their bicycle division to a billion dollar business.
Established in 1898 in Brazil, Caloi is one of the oldest and most established bicycle brands in the world. It is the largest bicycle brand in Latin America and is the leader in the Brazilian market. The purchase price was a high single digit multiple of Caloi's EBITDA. Sales in 2012 were close to R$273.5 million, a 22% increase over the previous year. The Company has an estimated market share in Brazil of more than 40%. The transaction is expected to be immediately accretive to Dorel's earnings.
Caloi's portfolio encompasses a full range of bicycles, from high-performance to children's models, including mountain bikes, urban, recreational and road bikes. Caloi's products are distributed across the country through a variety of channels, from mass market to independent bicycle dealers.
Caloi employs 900 people at its various locations, including its head office in São Paulo, the Technology and Logistics Center in Atibaia and its manufacturing facility in Manaus, which is the largest bicycle manufacturing plant outside Southeast Asia, producing more than 700,000 units per year.
Brazil will become a production hub for Dorel. Caloi's factory in Manaus will assemble bikes for the company's brands, such as Cannondale, Schwinn, Mongoose and GT to serve the Brazilian and export markets.
"This new partnership with Caloi positions Dorel as one of the largest bicycle companies in the world, as well as a leader of the Americas," commented Dorel President & CEO, Martin Schwartz. "We have built this segment into a billion dollar business in just nine years and see tremendous growth ahead. We remain focused on maximizing this sector so that we may continue to enhance shareholder value. We are delighted to welcome the Caloi team to Dorel. Eduardo Musa, current Caloi CEO will become the bicycle segment's Brazil President and will join its global management team."
Mr. Schwartz added that Dorel has been doing business in Brazil since 2009 when it established a new juvenile products division there. "We have developed a strong juvenile product operation in Brazil and the business has been growing this year. Despite current economic challenges in the country which we are well aware of, we believe the consumer market is good and is headed in the right direction. We see this transaction as a solid opportunity."
"Dorel has been steadily growing its global reach over the past four years in key growth markets such as China, Eastern Europe and now Brazil," said Robert Baird, CEO and Group President, Cannondale Sports Unlimited. "The addition of Caloi to our already strong portfolio of brands and global presence will help us achieve our goal of seeing our brands in every household, creating inspired experiences and improving the health and wellness for consumers around the world.
"Caloi's strong management team, its large distribution base and local production capabilities will accelerate the development of Dorel's bicycle brands in Brazil and benefit Brazilian consumers who will be able to access Dorel's strong international brands. The Caloi brand will also benefit from our technologies and expertise in building high performance cycling products," added Baird.
Caloi's Eduardo Musa celebrates the new partnership as "the conclusion of several years of work to transform Brazil as a real player in the worldwide bicycle industry. The Caloi/Dorel partnership will strongly benefit the Brazilian bicycle market. The expansion of Dorel's bicycle brands in our market will help meet the increasing demands of the Brazilian consumer for high quality, matched with innovation and style."
Caloi is supporting the leading Brazilian athletes in their preparation for the Olympic Games to be held in Rio de Janeiro in 2016. Its mountain bike team - the Caloi Elite Team - is the only UCI registered mountain bike team in Brazil.
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