Dorel to Acquire Majority Interest in a South American Juvenile Products Business
Montreal, Quebec - 11/3/2011
Dorel Industries Inc. (TSX: DII.B, DII.A) today announced it has significantly increased the presence of its Juvenile segment in South America by signing a share purchase agreement to acquire a 70% interest in an existing group of companies, known principally as Silfa, who own and operate the popular Infanti brand in Chile, Bolivia, Peru and Argentina. The transaction is expected to close in the fourth quarter, subject to the fulfillment of certain conditions.
With a history of success, 2010 sales of Silfa were approximately US$58 million and will be immediately accretive to earnings. With this investment, Dorel will also be entering the juvenile retail business as the transaction comprises the Baby Infanti chain of 52 specialty shops, of which 40 are in Chile and 12 are in Peru.
Created in 2002, Infanti is the most popular juvenile products brand in South America and enjoys a leading position in the market. Its product line is comprised of a broad variety of items including car seats, strollers, travel systems, high chairs, play yards, safety products, accessories, pre-school items and toys. Infanti products cater to all price categories with a focus on opening to mid price points. In addition to the Infanti line, Silfa also represents a number of other brands at the wholesale level, including Dorel’s Maxi Cosi and Safety 1st. The Baby Infanti retail stores sell a number of Dorel brands as well as several other well known competitive labels. It is the intention to continue to develop the business on this current platform.
“We have worked with Silfa for several years and have established a good working relationship with them. The transaction is intended to extend our reach in a market which we believe has great growth potential, provides Dorel with yet another important brand in these new territories and further solidifies our position as a global leader in the juvenile industry. Our involvement at the retail level may be new for Dorel but we are partnering with an excellent group which has maintained sustained growth for 10 years. This is a most exciting development for our Company,” stated Dorel President and CEO, Martin Schwartz.
Dorel Juvenile Segment Group President and CEO, Hani Basile, said the move into the four new South American countries is part of an on-going plan for territorial expansion and new market penetration. “With our previous initiatives in Australia and Brazil, we have developed a proven business model. We have specifically targeted these South American regions due to their significant growth potential. We believe that we have identified a quality partner that will create a winning formula. In addition, the Baby Infanti chain is a leader in the area and will provide us with an important strength to better serve our markets through immediate consumer feedback.”
Silfa CEO, Christian Sitnisky said that he, his partners and the executive team are delighted with the opportunity to merge their expertise with Dorel’s. “Dorel is a world-class organization with a proven record. We were extremely selective in our choice of partners as we are a very family oriented business that cares deeply about our personnel, customers, consumers and new product developments. We all share the same entrepreneurial spirit and see this new venture as an excellent way to further our growth in Latin America and to develop new opportunities.”
Dorel Industries Inc. (TSX: DII.B, DII.A) is a world class juvenile products and bicycle company. Established in 1962, 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 Safety 1st, Quinny, Cosco, Maxi-Cosi and Bébé Confort in Juvenile, as well as Cannondale, Schwinn, GT, Mongoose, IronHorse and SUGOI in Recreational/Leisure. Dorel’s Home Furnishings segment markets a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel is a US$2.3 billion company with 4700 employees, facilities in nineteen countries, and sales 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.