MONTREAL, Quebec (BRAIN)—Dorel Industries has just announced the acquisition of the Cannondale Bicycle Corporation.
The total value of the all-cash transaction will be $190 (U.S) to $200 (U.S) million, subject to Cannondale's earnings results for the year ending June 30, 2008.
The transaction, which will be immediately accretive to Dorel's earnings, is being financed through debt.
Cannondale and Sugoi are being purchased from an affiliate of Pegasus Capital Advisors, which acquired the company in 2003. 2007 sales for Cannondale and Sugoi were approximately $200 million.
Dorel president and chief executive officer Martin Schwartz said that in light of the acquisition the Company's Recreational/Leisure segment is being split into two distinct operating divisions.
A new Dorel Independent Bicycle Dealers (IBD) division, the Cannondale Sports Group, is being created and will focus exclusively on this category with premium-oriented brands. Cannondale, GT Bicycles and Sugoi will all be part of the Cannondale Sports Group, according to Schwartz.
Backed by Dorel's extensive resources, the Cannondale Sports Group will build on Cannondale's strengths to grow significantly within the IBD channel.
"Our intention is to build a world-class company that dealers will want to buy from," said Schwartz. Pacific Cycle will become a stand-alone division with an exclusive focus on mass merchant customers.
"The Cannondale purchase is consistent with Dorel's plan to concentrate on its core businesses. Since buying Pacific Cycle in 2004 we have learned a great deal about the bicycle industry and have found it to be a true value driver for Dorel. We are committed to pursuing this sector, and this important transaction will position us globally in a most material way. Dorel recognizes the importance and potential of the Independent Bicycle Dealer channel and is purchasing Cannondale as the first step to become the world's number one IBD player. Cannondale will be the crown jewel of this new Dorel division, which will seek additional such growth opportunities," he added.
"We're excited about the future for Cannondale and our retailers. Cannondale's goal is to be the number one supplier to the IBD channel. Dorel's vast resources and experience provide us with long term stability and the ability to accelerate our goals for growth with our retailers," said Matt Mannelly, president and chief executive officer of Cannondale.
Dorel purchased Pacific Cycle (Schwinn, Mongoose and GT Bicycle brands) in 2004.
Pegasus bought a bankrupt Cannondale in January 2003 for approximately $58 million.
For full story be sure to read the March 1 Bicycle Retailer and Industry News.
—Jason Norman
