Dorel News

Dorel Concludes Acquisition of the Juvenile Business of Asian-based Lerado Group

Montreal, Quebec - 11/3/2014

Dorel Industries Inc. (TSX: DII.B, DII.A) today announced it has completed its previously-announced acquisition of the juvenile business of Hong Kong-based Lerado Group, one of the largest juvenile product manufacturers in China.  The purchase price was HK$930 million (US$120 million) and has been funded from the proceeds of its successful offering of US$120 million of extendible convertible unsecured subordinated debentures. With the closing of the transaction, the maturity date of the Debentures is automatically extended to November 30, 2019. Lerado Group is a subsidiary of Lerado Group (Holding) Company Limited, a publicly traded company listed on the Hong Kong Stock Exchange, specializing in the design and manufacture of a wide range of infant and juvenile products.

“This acquisition will improve Dorel Juvenile’s value chain and is a sound investment in our future,” commented Dorel President & CEO, Martin Schwartz.  “Lerado Juvenile will ensure that we continue to further grow our industry leadership and it will augment profitability within the second year of operations.

“We have had a transition team in place in China since shortly after the transaction was announced in June, headed by a seasoned industry veteran from Asia who now becomes responsible for all operations.  The production of several products has already been shifted to Lerado from other suppliers.”

Some of the benefits of the transaction include:

  • Going forward Dorel will control its own destiny, allowing it to be more flexible in an increasingly changing competitive landscape and delivering product to market faster.

  • It vertically integrates production capabilities.

  • Supply chain management is further strengthened as supplier dependency is reduced.

  • Providing a platform for enhanced profitability

  • R&D expertise is further expanded

  • The acquisition will also accelerate Dorel’s plans to grow in the Asian domestic market, an opportunity which, thus far, has been under-developed.

The purchase provides Dorel with its first company-owned factories in Asia and includes four extensive, modern facilities.  The factories are based in China and there is an extensive R&D centre in Taiwan, the total assets encompassing over 2.5 million square feet of modern resources.

“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 Juvenile’s current customers at a service level that they have come to expect,” concluded Mr. Schwartz.

 

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