Benefits of the Go-Private Transaction

Premium to Trading Price: The value of the Consideration offered to Public Shareholders represents a premium of 32% to the $11.01 closing price of the Class B Subordinate Voting Shares on the TSX on September 4, 2020, the date on which the Family Shareholders granted exclusivity to the Buyer Group, and for the periods ended October 30, 2020, being the last trading day prior to announcement by Dorel that it had reached an agreement in principle for the Arrangement with the Buyer Group, a 19% premium to the 60-day volume weighted average trading price ("VWAP") and a 7% premium to the 30-day VWAP of Dorels Class B Subordinate Voting Shares on the TSX.

Certainty of Value and Liquidity: The Consideration to be paid to the Public Shareholders pursuant to the Arrangement is all cash, which provides Public Shareholders with certainty and immediate liquidity. By contrast, Dorel has historically experienced limited trading liquidity, which makes it difficult for Public Shareholders to realize meaningful liquidity through the public markets on which the Shares trade.

Fairness Opinions and Formal Valuation: Each of BMO Nesbitt Burns Inc. ("BMO Capital Markets") and TD Securities Inc. ("TD Securities") provided an opinion to the effect that, as of November 12, 2020 and subject to the scope of review, assumptions and limitations set out in their respective opinions, the Consideration to be received by the Public Shareholders pursuant to the Arrangement is fair, from a financial point of view, to the Public Shareholders (collectively, the "Fairness Opinions"). TD Securities also provided the Special Committee with the Formal Valuation dated November 12, 2020, which was completed under the supervision of the Special Committee. In the Formal Valuation, TD Securities determined that as of November 12, 2020, and subject to the scope of review, assumptions and limitations contained therein, the fair market value of the Shares ranged from $14.00 to $17.00 per Share.

The full texts of the Fairness Opinions and Formal Valuation, setting out the scope of review, assumptions made, matters considered and limitations on the reviews undertaken in connection therewith, are annexed as Appendix F (Formal Valuation and TD Securities Fairness Opinion) and Appendix G (BMO Fairness Opinion) to this Circular. The summaries of the Fairness Opinions and Formal Valuation in this Circular are qualified in their entirety by reference to the full texts of the Fairness Opinions and Formal Valuation, respectively. Neither of the Fairness Opinions nor the Formal Valuation is a recommendation as to whether or not Shareholders should vote in favour of the Arrangement. See "The Arrangement - Determinations and Recommendations of the Special Committee and the Board - Fairness Opinions and Formal Valuation".

Procedural Safeguards for Public Shareholders:The Arrangement was negotiated by the Special Committee, which is comprised solely of directors who are unrelated to the Family Shareholders or Management, and which was advised by experienced, qualified and independent financial and legal advisors. The Arrangement is subject to the following Shareholder and Court approvals, which provide additional protection to Shareholders:

  • the Arrangement Resolution must be approved by at least two-thirds (66⅔%) of the votes cast by Shareholders present in person or represented by proxy at the Meeting and entitled to vote;
  • the Arrangement Resolution must be approved by a majority (50% + 1) of the votes cast by the holders of Class B Subordinate Voting Shares present in person or represented by proxy at the Meeting and entitled to vote, other than the Family Shareholders; and
  • the Arrangement must also be approved by the Court, which will consider, among other things, the fairness and reasonableness of the Arrangement to Public Shareholders.

Attractive Transaction Relative to Status Quo: The Special Committee, with the assistance of its financial and legal advisors, and based upon its collective knowledge of the business, affairs, operations, assets, liabilities, financial condition, results of operations and prospects of Dorel and the current and prospective environment in which Dorel operates (including global tariffs and the current global economic and market conditions, notably in the context of the COVID-19 pandemic), believes that the Arrangement is an attractive proposition for Shareholders relative to the status quo.

Challenges Presented by Operational, Financial and Share Price Performance
Dorels Shares have historically traded at a notable discount to those of its peers and currently trade at a large discount to their previous trading levels. The Share price has declined significantly over the last five years, with a Share price decrease of approximately 53% for a variety of reasons, including concerns about global tariffs, the COVID-19 pandemic, Dorels volatile margins and financial situation as well as its mixed track record of delivering on an operational and financial level. The Special Committee believes that this dynamic is likely to continue, rendering the all-cash Consideration offered by the Buyer Group attractive for Public Shareholders.

Extensive Process
BMO Capital Markets conducted a comprehensive process, contacting more than 25 potential financial sponsor partners over a period of eleven months leading up to the Arrangement. The Arrangement Agreement is the result of extensive arms-length negotiations between Dorel and the Buyer Group, with the oversight and participation of the Special Committee, which received independent legal and financial advice throughout the process. The purchase price of $14.50 per Share represents the highest proposal received as part of the process.

Ability to Respond to Superior Proposals
Under the Arrangement Agreement, the Board, in certain circumstances until Shareholder approval is obtained, is able to consider, accept and enter into a definitive agreement with respect to a superior proposal, as defined in the Arrangement Agreement (a "Superior Proposal"), or withdraw, modify or amend its recommendation that Shareholders vote to approve the Arrangement Agreement. In the view of the Special Committee, the termination fee potentially payable by the Corporation to the Purchaser under the Arrangement Agreement in certain circumstances, being approximately $14.1 million (the "Termination Fee"), would not preclude a third party from making a Superior Proposal. The Family Executives, and Dorels six independent directors and two other executive officers (the "Supporting D&Os" and together with the Family Executives, the "Supporting Shareholders") have entered into customary voting and support agreements (the "Voting Support Agreements") with the Buyer Group. The Voting Support Agreements entered into by the Supporting D&Os provide that the Supporting D&Os may vote for, support or participate in a Superior Proposal. However, the limitations contained in the Voting Support Agreements entered into by the Family Executives in favour of the Purchaser restrict the ability of the Family Executives to vote for, support or participate in a Superior Proposal. This may discourage other parties from offering to acquire Dorels Shares. See "Summary of the Arrangement Agreement - Additional Covenants Regarding Non-Solicitation".

Arms Length Negotiations and Oversight
The Arrangement Agreement is the result of robust, arms-length negotiations between Dorel and the Buyer Group. Extensive financial, legal and other advice was provided to the Special Committee and the Board. This advice included detailed financial advice from highly-qualified financial advisors, including with respect to Dorel remaining an independent publicly-traded company and continuing to pursue Dorels business plan on a stand-alone basis as well as a formal valuation of the Shares. The Special Committee believes that the representations, warranties and covenants of the Parties and the restrictions on the conduct of Dorels business until the completion of the Arrangement are reasonable, and that the conditions of the respective obligations of the Parties and the amount of the Termination Fee payable by the Corporation to the Purchaser under the Arrangement Agreement in certain circumstances, being approximately $14.1 million, are fair to Dorel.

Limited Conditions to Closing
The Buyer Groups obligation to complete the Arrangement is subject to a limited number of customary conditions that the Special Committee and the Board believe are reasonable in the circumstances. The completion of the Arrangement is not subject to any financing condition.

Family Shareholders Intentions
The Family Shareholders have advised the Special Committee that they are not interested in any alternative transaction, including the sale of their interests in Dorel or the sale of any of Dorels businesses segments or material assets.

Purchaser Termination Fee
The Purchaser has agreed to pay the Corporation a termination fee of $23.6 million (the "Reverse Termination Fee") if the Arrangement is not completed in certain circumstances.

Significant Shareholder Support
In connection with the proposed Arrangement, the Family Executives have entered into irrevocable Voting Support Agreements and the Supporting D&Os have entered into Voting Support Agreements pursuant to which they have agreed to support the Arrangement and vote all of their Shares in favour of the Arrangement Resolution and against any resolution submitted by any Shareholder that is inconsistent therewith. Consequently, Shareholders beneficially owning Shares to which there are attached 60.20% of the votes attached to all outstanding Shares have agreed to vote, or cause to be voted, their Shares in favour of the Arrangement Resolution.

Dissent Rights
Registered Shareholders, other than holders of Shares who have failed to exercise all the voting rights carried by the Shares held by such holders against the Arrangement Resolution, and other than Family Shareholders, have the ability to exercise the right to demand the repurchase of their Shares and be paid the fair value for their Shares, as determined by the Court.