Private deal pushing up the value of Dorel stock

MONTREAL— Shares in Dorel Industries Inc. edged Monday after it revealed a going-private deal with a group led by Cerberus Capital Management and the family that controls the consumer products company’s multiple-voting shares.

Its subordinate voting shares, which had fallen nearly 10 per cent on Friday before the Monday morning announcement, were up 45 cents, or 3.1 per cent, in early trading at $14.84 — above the proposed takeover price. It closed at $15.05.

Under the proposed deal, which values the company at about $470 million, the buyers will pay $14.50 per share for the shares the family does not already hold.

“Dorel has granted the buyer group exclusivity through Nov. 10, 2020, to complete negotiations and enter into a definitive transaction agreement between Dorel and the buyer group,” the company said before markets opened.

Montreal-based Dorel makes a variety of consumer goods such as Cosco and Safety 1st child car seats, Cannondale and Schwinn bicycles, and juvenile furniture under brands such as Dorel Living and DHP. The company’s shares have been rising since the class B subordinate shares hit an intraday low of $1.25 this year.

The controlling family shareholders hold 19.18 per cent of Dorel’s outstanding shares on an economic basis and 60.17 per cent on a voting basis.

The family shareholders include Dorel chief executive Martin Schwartz, and chief financial officer Jeffrey Schwartz as well as Alan Schwartz, the company’s executive vice-president operations, and Jeff Segel, executive vice-president sales and marketing.

The family told the Dorel board in December 2019 that they planned to seek a partner for a potential privatization of the company and have said they are not interested in any alternative transaction.