Dorel Intends to Acquire the Juvenile Business of Asian Based Lerado Group

June 16, 2014
        --  Strategic acquisition to reinforce supply chain and increase
        --  Proposed purchase includes significant manufacturing and R & D



MONTREAL, June 16, 2014 /PRNewswire/ – Dorel Industries Inc. (TSX: DII.B
DII.A) today announced that it has signed an agreement to acquire the
juvenile business of Hong Kong-based Lerado Group, one of the largest
juvenile product manufacturers in China, specializing in the design and
manufacture of a wide range of infant and juvenile products. The Lerado
Group is a subsidiary of Lerado Group (Holding) Company Limited, a
publicly traded company listed on the Hong Kong Stock Exchange. The
purchase price has been established at HK$930 million (US$120 million),
subject to adjustments, and will be due upon closing.

“This is a sound investment in our future to ensure that going forward
we control our own destiny. This venture will allow us to be more
flexible in an increasingly changing environment. It has become more
important than ever to be vertically integrated and be in direct
control of our supply chain,” stated Dorel President & CEO, Martin

“Dorel has built its juvenile business into a global player by focusing
on several key pillars; great quality products, diversity of strong
brands and a strong distribution model. Now with these additional
excellent facilities in Asia, our strategy to maintain and grow our
leadership in the industry is further strengthened,” added Dorel
Juvenile Group President & CEO Jean-Claude Jacomin.

Mr. Schwartz emphasized that even though Dorel will operate its own
manufacturing network, it will continue to purchase other juvenile
products from existing Asian suppliers with whom relationships have
been built over time.

The purchase will provide Dorel with its first company-owned factories
in Asia. It is expected that the current management overseeing the
facilities will remain with Dorel and will be joined by additional
Dorel employees. They will work closely with existing product
development teams at the Company’s various juvenile divisions, as well
as with existing staff at Dorel’s quality control and customer support
offices located throughout China. Dorel will benefit from Lerado’s
consistent investment in new facilities and technology, including a
recently constructed car seat crash test laboratory similar to those
owned by Dorel in the US and Europe.

Beyond enhanced manufacturing capabilities, Lerado has established a
modern R & D centre based in Taiwan which will complement Dorel’s
existing teams. It is also expected that the acquisition will
accelerate the Company’s plans to grow in the Asian market place, an
area of opportunity that thus far has been under exploited.

The transaction is subject to regulatory review as well as approval by
the shareholders of Lerado and it is anticipated to close in the fourth
quarter. The acquisition is not expected to be accretive to earnings in
the first year of operations as work will be required to integrate
these new facilities into existing operations.

The acquisition includes four new extensive facilities, of which three
are based in China with one based in Taiwan. The total assets acquired
encompass over 2.5 million square feet of modern production, research
and development and testing resources as well as office space. Included
are two fully integrated campuses in Zhongshan, China housing the
headquarter factory and offices, as well as a number of independent
buildings for production and employee accommodations. There is also a
recently built factory in Huang Shi, China.

“These new facilities will complement our existing facilities worldwide
and will allow us to best service Dorel’s existing customer base. We
also look forward to continuing to supply Lerado’s current customers at
a service level that they have come to expect from Lerado,” concluded
Mr. Schwartz.

RBC Capital Markets, KPMG and Norton Rose Fullbright have acted as
advisors for Dorel on this transaction.


Dorel Industries Inc. (TSX: DII.B DII.A) is a world class juvenile products and bicycle
company. Dorel creates style and excitement in equal measure to safety,
quality and value. The Company’s lifestyle leadership position is
pronounced in both its Juvenile and Bicycle categories with an array of
trend-setting products. Dorel’s powerfully branded products include
global juvenile brands Safety 1(st), Quinny, Maxi-Cosi, Bébé Confort and Tiny Love, complemented by
regional brands such as Cosco and Infanti. In Recreational/Leisure,
brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and
SUGOI. Dorel’s Home Furnishings segment markets a wide assortment of
both domestically produced and imported furniture products, principally
within North America. Dorel has annual sales of US$2.4 billion and
employs approximately 6,400 people in facilities located in twenty-five
countries worldwide.

Caution Regarding Forward Looking Statements

Certain statements included in this press release may constitute
“forward-looking statements” within the meaning of applicable Canadian
securities legislation. Except as may be required by Canadian
securities laws, Dorel does not undertake any obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Forward-looking statements, by
their very nature, are subject to numerous risks and uncertainties and
are based on several assumptions which give rise to the possibility
that actual results could differ materially from Dorel’s expectations
expressed in or implied by such forward-looking statements and that the
objectives, plans, strategic priorities and business outlook may not be
achieved. As a result, Dorel cannot guarantee that any forward-looking
statement will materialize. Forward-looking statements are provided in
this press release for the purpose of giving information about
Management’s current expectations and plans and allowing investors and
others to get a better understanding of Dorel’s operating environment.
However, readers are cautioned that it may not be appropriate to use
such forward-looking statements for any other purpose.

Forward-looking statements made in this press release are based on a
number of assumptions that Dorel believed were reasonable on the day it
made the forward-looking statements. Factors that could cause actual
results to differ materially from the Company’s expectations expressed
in or implied by the forward-looking statements include: general
economic conditions; changes in product costs and supply channel;
foreign currency fluctuations; customer and credit risk including the
concentration of revenues with few customers; costs associated with
product liability; changes in income tax legislation or the
interpretation or application of those rules; the continued ability to
develop products and support brand names; changes in the regulatory
environment; continued access to capital resources and the related
costs of borrowing; changes in assumptions in the valuation of goodwill
and other intangible assets and subject to dividends being declared by
the Board of Directors, there can be no certainty that Dorel’s Dividend
Policy will be maintained. These and other risk factors that could
cause actual results to differ materially from expectations expressed
in or implied by the forward-looking statements are discussed in
Dorel’s annual MD&A and Annual Information Form filed with the
applicable Canadian securities regulatory authorities. The risk factors
outlined in the previously mentioned documents are specifically
incorporated herein by reference.

Dorel cautions readers that the risks described above are not the only
ones that could impact it. Additional risks and uncertainties not
currently known to Dorel or that Dorel currently deems to be immaterial
may also have a material adverse effect on our business, financial
condition or results of operations. Given these risks and
uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results.

Except as otherwise indicated, forward-looking statements do not reflect
the potential impact of any non-recurring or other unusual items or of
any dispositions, mergers, acquisitions, other business combinations or
other transactions that may be announced or that may occur after the
date hereof. The financial impact of these transactions and
non-recurring and other unusual items can be complex and depends on the
facts particular to each of them. Dorel therefore cannot describe the
expected impact in a meaningful way or in the same way Dorel presents
known risks affecting the business.

SOURCE Dorel Industries Inc.

Source: PR Newswire

comments powered by Disqus