MONTRÉAL (BRAIN) — The group that hopes to buy Dorel Industries' public shares and take the business private has raised its stock offer by about 10%, two weeks before shareholders vote on whether to accept the offer. The increase comes two days after a major investment group announced that it would vote against accepting the offer at the previous price.
Dorel is the owner of Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse, Fabric and other cycling brands, as well as home furniture and juvenile products divisions.
In November a family group that includes several top Dorel executives and whose members control announced that Cerberus Capital Management was backing their bid to take the company private. It said it would pay CA$14.50 ($11.09) for all outstanding shares. The Dorel board approved the offer and scheduled a special shareholders meeting for Jan. 12 where shareholders would vote on accepting the offer.
On Dec. 28 the board delayed the shareholder meeting until Feb. 16, saying a delay would give shareholders more time to consider the effects of the second wave of COVID-19 on Dorel's future business. The meeting will be held virtually.
Last Friday, the Canadian investment firm Letko, Brosseau & Associates Inc, which owns about 12.5% of the outstanding shares, said it would vote against the offer. In a press release, Letko Brosseau said the CA$14.50 offer was "opportunistic and significantly undervalues" Dorel. The firm said a equity valuation prepared by TD Securities for the potential buyers was too conservative.
"We have been long time shareholders of Dorel," the Letko, Brosseau statement read. "To protect the value of our investment, we intend to vote against the proposed going private transaction. We strongly believe in the long-term potential of the company and note that the family shareholders share our optimism as they plan to remain shareholders of the company."
The group said its valuation put the stock shares at about CA$18.88.
On Monday Dorel announced that its board had accepted the amended offer from Cerberus and the family shareholders and recommended that shareholders vote to accept it as well. Dorel said the revised priced followed discussions with shareholders including those holding more than 50% of Dorel’s Class B Subordinate Voting Shares.
The company noted that the revised offer is above the mid-point of the range of values determined by TD Securities, which had valued shares at between C$14.00 and C$17.00 per share.
The transaction needs approval by two-thirds of the votes cast, and by more than 50% of the votes cast by non-family shareholders. Shareholders who had already voted by proxy will need to vote again on the new offer if they want their vote to be counted.
Dorel stock quote from the Toronto stock exchange: money.tmx.com/en/quote/DII.A.
