Dorel Industries commits to remaining public as they terminate plans to go private
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.
Dorel Industries Inc. says it will continue to pursue its business strategy going forward after terminating an agreement to go private after discussions with shareholders.
“Moving ahead. Business as usual,” a spokesman for the company said in an email on Feb. 16.
A group led by Cerberus Capital Management had previously agreed to buy outstanding shares of Dorel for $16 apiece, except for shares owned by the family that controls the company’s multiple-voting shares.
But Dorel chief executive Martin Schwartz said the Montreal-based maker of car seats, strollers, bicycles and home furniture pulled the plug on a deal on the eve of Feb. 17’s special meeting after reviewing votes from shareholders.
“Independent shareholders have clearly expressed their confidence in Dorel’s future and the greater potential for Dorel as a public entity,” he said in a news release.
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, which include Schwinn and Mongoose bikes, Safety 1st-brand car seats and DHP Furniture.
Dorel said the move to end the go-private deal was mutual, despite the funds’ increased purchase price offer earlier this year.
It said there is no break fee applicable in this case.
Montreal-based investment firm Letko, Brosseau & Associates Inc. and San Diego’s Brandes Investment Partners LP, which together control more than 19 per cent of Dorel’s outstanding class B subordinate shares voiced their opposition to the amended offer, which was increased from the initial Nov. 2 offer of $14.50 per share.
Shareholder advisory firms Glass Lewis and Institutional Shareholder Services had recommended Dorel Industries Inc. shareholders vote against the revised proposal.
Glass Lewis described the increased offer as “a more pragmatic reassessment of the company’s erstwhile effort to buttress the fundamental privatization narrative,” but said it still failed to mitigate its core concerns.
