MONTRÉAL (BRAIN) — Dorel Industries Inc. said Friday it will sell one of its Chinese manufacturing facilities for juvenile products to the Guangdong Roadmate Group Co. for $51 million.
The facility is located in Zhongshan, China. Dorel Industries will continue operating its other manufacturing location in Huangshi as well as its product sourcing and quality-control organizations that service all three of its business segments, including Dorel Sports with bike brands Cannondale, Schwinn, GT, and others.
The sale does not include Dorel Juvenile's domestic sales operation based in Shanghai that was acquired along with the manufacturing facility in 2014. The sale is subject to approval by Chinese regulatory authorities and is expected to close before the end of the second quarter.
"The strategic direction is intended to allow Dorel Juvenile to further lower the required investment to bring new products to market and to deliver a broader product line with much quicker time to market," said Dorel Industries president and CEO Martin Schwartz. "It is also expected to decrease complexity, improve cash flow, and reduce volatility in the direct costs of manufacturing due to variations in currency and commodity prices. Dorel expects that the sale of the Zhongshan facility will also simplify the organization and free-up resources so that Dorel Juvenile can focus on product innovation and branding across its various markets."
Dorel Industries intends to use the net proceeds from the sale to reduce existing debt. As a result of the sale, Dorel Industries expects to incur a non-cash loss of about $8 million. It has had a drama-filled winter, as Schwartz led a failed bid, backed by Cerberus Capital, to take the company public. Schwartz said he viewed shareholders' opposition to the move as confidence in Dorel's potential as a public company.
