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

Jun 16, 2014, 08:48 ET from Dorel Industries Inc.

  • Strategic acquisition to reinforce supply chain and increase competitiveness
  • Proposed purchase includes significant manufacturing and R & D facilities


MONTREAL, June 16, 2014 /CNW Telbec/ - 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 Schwartz.

"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 1st, 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.

Image with caption: "Zhongshan, China (CNW Group/Dorel Industries Inc.)". Image available at:

Image with caption: "Zhongshan, China (CNW Group/Dorel Industries Inc.)". Image available at:

Image with caption: "Taiwan R & D centre (CNW Group/Dorel Industries Inc.)". Image available at: