BICYCLE MAKER DOREL ENDS TAKE-PRIVATE DEAL WITH CERBERUS CAPITAL.

TAKEOVER BID

Cerberus Capital Management LP and the founding family of Dorel Industries Inc. terminated their bid to take private the Canadian toy and bicycle maker after it failed to win enough support from shareholders.

Dorel said Monday the buyers pulled the plug on the $453-million deal after examining the proxy votes that came in by Friday's deadline. A shareholder meeting had been scheduled for Tuesday morning on the $16-a-share bid.

The move ends a battle that began in November, when New York-based Cerberus, the Schwartz family and co-founder Jeff Segel offered to take over Montreal-based Dorel for $14.50 a share. The proposal spurred immediate opposition from asset manager Letko, Brosseau & Associates Inc., the company's second-largest outside shareholder, which blasted the bid as opportunistic and said it significantly undervalued Dorel.

Cerberus and the family raised the offer to $16 a share earlier this month, but the sweetened bid failed to win over Letko or Brandes Investment Partners LP, another top Dorel investor. Letko owns about 12.2 per cent of Dorel and Brandes holds about seven per cent on behalf of its clients, according to the money managers' statements.

Dorel's shares plunged at the onset of the pandemic but have surged more than 11-fold from a March low, driven in part by increased demand for bicycles. Dorel makes Cannondale, Schwinn and Mongoose bicycles, as well as Maxi-Cosi and Cosco baby products and Dorel and Signature Sleep home products.

“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,” Dorel chief executive Martin Schwartz said in a statement.

Dorel says it will continue to pursue its business strategy going forward after terminating the agreement.

“Moving ahead. Business as usual,” a spokesman for the company said in an email on Monday, The Canadian Press reported.

Dorel's board of directors, with Martin Schwartz, Alan Schwartz, Jeffrey Schwartz and Jeff Segel recused, unanimously approved the deal's termination upon the recommendation of a special committee.

The transaction required approval by two-thirds of the votes cast, and more than 50 per cent of the votes cast by non-family shareholders.

Schwartz said enhancing shareholder value remains a top priority while it stays focused on growing its brands. Dorel shares ended the week at $15.78 in Toronto on Friday, 9.7-per-cent higher than where they were trading before the first bid was announced on Nov. 2. Canadian markets were closed for the holiday on Monday.