Family ups purchase price for outstanding Dorel shares
MONTREAL – The founding family of Dorel Industries has sweetened its offer for those shares of the consumer goods giant that it doesn’t already own as part of its move to take the company private. The shareholders are expected to vote in favour of the offer at special meeting to be held on February 16.
The new purchase price will be $16.00 per share in cash, up from the $14.50 per share originally offered when the bid was first announced this past November.
At the time, Dorel Industries said a buyer group consisting of the family shareholders and the New York-based investment firm Cerberus Capital Management will acquire all of company’s outstanding Class B Subordinate Voting Shares and Class A Multiple Voting Shares.
The family shareholders include Martin Schwartz, who has been president and chief executive officer of Dorel since 1992; Jeffrey Schwartz, executive vice president and chief financial officer; Alan Schwartz, executive vice president of operations; and, Jeff Segel, executive vice president of sales and marketing. Each also sits on Dorel’s board of directors and, according to company filings, they control approximately 6.58 million of the outstanding shares.
Through its Dorel Home segment, the company is one of the largest Canadian owned furniture manufacturers although most of its assortment is produced outside of this country. Among its better-known brands are Ameriwood Home, Signature Sleep, Dorel Living, DHP and Cosco Home & Office.
By way of explanation, the company said the increase in the purchase price follows discussions with shareholders holding more than 50% of Dorel’s Class B Subordinate Voting Shares. The revised terms have been unanimously approved by Dorel’s board of directors (with Martin Schwartz, Alan Schwartz, Jeffrey Schwartz and Jeff Segel recusing themselves).
The increased purchase price of C$16.00 per share represents a 10.3% increase to the initial purchase price of C$14.50 per share. It also represents a premium of 267.8% from the C$4.35 closing price of Dorel’s Class B Subordinate Voting Shares on the Toronto Stock Exchange (TSX) on February 20, 2020, the date which preceded a five-day market correction related to the COVID-19 pandemic.
It is also 45.2% higher than the C$11.02 closing price for those shares on September 4, 2020, the date on which the Buyer Group was granted exclusivity; and 30.9% and 18.5% higher than the 60-day and 30-day volume weighted average trading price, respectively, of shares for the period ended October 30, 2020.
The increased purchase price of C$16.00 per share is above the mid-point of the range for the fair market value of the shares of C$14.00 to C$17.00 per share as of November 12, 2020, as set out in the valuation commissioned from TD Securities Inc.
In a statement, the company said the revised arrangement provides Dorel’s public shareholders with certainty of value and immediate liquidity while providing procedural safeguards. It is also “an attractive transaction relative to the status quo, particularly in light of Dorel’s continuing operational challenges.”
Including assumed debt, fees and expenses, the deal is valued US$1.012 billion or approximately 8.5 times Dorel’s adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) for the 12 months ending September 30, 2020.
In addition to shareholder approval, the deal must also be approved by the Québec Superior Court.
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