Today, Canadian parent company Dorel Industries entered a definitive agreement, to sell its US-based bicycle division Dorel Sports with brands like Cannondale, Schwinn, GT and Mongoose to the Dutch mobility group Pon Holdings, which already holds Kalkhoff, Focus, Cervélo, Santa Cruz, Gazelle, and Swapfiets amongst others. The parties agreed on a purchase price of USD 810 million in cash (EUR 701 million), payable at the time of closing.
The acquisition fully fits Pon Holdings strategy to build a complete portfolio of premium and electric bike brands covering all categories. It does not only create a top position worldwide, but especially paves the way to the US market for Pon Holdings. Furthermore, Pon.Bike expects to benefit from the e-Commerce experience of Dorel Sports, as the target already generates 20% of its revenues online. Dorel industries intends to use the proceeds from the transaction to reduce indebtedness, return capital to shareholders and for general corporate purposes. The sale has been unanimously approved by the Boards of both companies and, under applicable corporate law, it is not subject to approval by Dorel’s shareholders.
A going-private transaction of Dorel Industries with Cerberus Capital Management proposed by the family shareholders in late 2020 was cancelled after discussions with many of the company’s shareholders and a review of the submitted proxy votes prior to the deadline. Major shareholder’s had expressed, that they perceive the going private to be bad for the investors. The going private was intended to increase Dorel’s flexibility to react to changing market conditions. President and CEO of Dorel Martin Schwartz had commented: “As a private company we will have the liberty to pursue new opportunities faster, free from constant market scrutiny.”
The current transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals and the absence of any material adverse changes with respect to Dorel Sports until closing. The sale is not subject to any financing conditions. The transaction will consist of the sale by Dorel of 100% of the shares of its indirect wholly owned subsidiary companies comprising Dorel Sports as well as certain related assets.
Baird Global Investment Banking and BMO Capital Markets are acting as financial advisors and Fasken Martineau DuMoulin LLP as legal counsel to Dorel and Lazard is acting as financial advisor and Goodmans as legal advisor to Pon Holdings in connection with the sale of Dorel Sports.
“Acting on feedback from our shareholders, Dorel embarked on a thorough review of strategic alternatives earlier this year. […] The divestiture of Dorel Sports represents a unique opportunity to unlock value by capitalizing on strong demand for scaled assets in the bicycle segment,” said Martin Schwartz, Dorel President and CEO. He added, “Dorel Sports has been an important part of our organization since 2004 and we are very proud of the global success it has achieved.”
The definitive sale agreement with Pon Holdings follows a competitive sales process. Dorel believes that the interest in Dorel Sports expressed during the robust sales process reflects the excellent work by the Dorel Sports team to improve profitability, gain new customers and enhance the operating structure and cost profile of Dorel Sports.
Janus Smalbraak, CEO of Pon Holdings says: “Dorel Sports really is complementary to Pon.Bike and that’s why this is such a logical step. Together we can further cater the ever growing demand for quality and electric bikes, whether it’s for urban use, leisure or sports. Biking is not only healthy, it also plays a critical role in fighting inner-city congestion. It’s one of the most sustainable ways of transport. We are determined to make bikes a powerful part of mobility.”
Dorel Sports owns the worldwide renowned brand Cannondale, with a complete range of premium bike models for all types of riders, including a strong e-portfolio. The American Original brand Schwinn is the number 1 in awareness in the United States, with a heritage of 125 years. The same rich history applies to Caloi, market leader in Brazil providing a leading position in Latin and South America. Mongoose and GT are both from California and are icons in the Dirt and BMX community. For over ten years, Pon Holdings has been building a worldwide portfolio of leading bicycle brands. It started with the acquisition of the Netherlands based Gazelle in 2012, currently one of Europe’s most well-known brands. Later on, Kalkhoff and Focus in Germany, Cervélo and Santa Cruz in the US, as well as the Dutch Urban Arrow and BBB Cycling were added to Pon.Bike. Leading to a top 5 position in the worldwide market and revenues of 1.5 billion euro. Pon.Bike leads in e-bike sales and introduces new concepts for renting, leasing and retail in the European bicycle market with brands such as Swapfiets and Lease a Bike. The role of the independent bicycle dealer for sales and service of premium brands remains important.
Source: Dorel Industries, Pon Holdings
Image: Pon Holdings, Dorel Sports