Press release from CNW Group
Dorel aquires Brazil's Caloi, Latin America's largest bicycle brand
Thursday, August 22, 2013
Dorel aquires Brazil's Caloi, Latin America's largest bicycle brand08:00 EDT Thursday, August 22, 2013
Transaction boosts Dorel's bicycle revenues to more than US$ 1 billion
TSX: DII.B, DII.A
MONTREAL, Aug. 22, 2013 /CNW Telbec/ -Dorel Industries Inc. (TSX: DII.A, DII.B) today announced it is acquiring a 70% interest in Caloi, a major Brazilian manufacturer of bicycles and bicycle equipment. Established in 1898 in Brazil, Caloi is one of the oldest and most established bicycle brands in the world. It is the largest bicycle brand in Latin America and is the leader in the Brazilian market. The purchase price was a high single digit multiple of Caloi's EBITDA. Sales in 2012 were close to R$273.5 million, a 22% increase over the previous year. The Company has an estimated market share in Brazil of more than 40%. The transaction is expected to be immediately accretive to Dorel's earnings.
Caloi's portfolio encompasses a full range of bicycles, from high-performance to children's models, including mountain bikes, urban, recreational and road bikes. Caloi's products are distributed across the country through a variety of channels, from mass market to independent bicycle dealers.
Caloi employs 900 people at its various locations, including its head office in São Paulo, the Technology and Logistics Center in Atibaia and its manufacturing facility in Manaus, which is the largest bicycle manufacturing plant outside Southeast Asia, producing more than 700,000 units per year.
Brazil will become a production hub for Dorel. Caloi's factory in Manaus will assemble bikes for the company's brands, such as Cannondale, Schwinn, Mongoose and GT to serve the Brazilian and export markets.
"This new partnership with Caloi positions Dorel as one of the largest bicycle companies in the world, as well as a leader of the Americas," commented Dorel President & CEO, Martin Schwartz. "We have built this segment into a billion dollar business in just nine years and see tremendous growth ahead. We remain focused on maximizing this sector so that we may continue to enhance shareholder value. We are delighted to welcome the Caloi team to Dorel. Eduardo Musa, current Caloi CEO will become the bicycle segment's Brazil President and will join its global management team."
Mr. Schwartz added that Dorel has been doing business in Brazil since 2009 when it established a new juvenile products division there. "We have developed a strong juvenile product operation in Brazil and the business has been growing this year. Despite current economic challenges in the country which we are well aware of, we believe the consumer market is good and is headed in the right direction. We see this transaction as a solid opportunity."
"Dorel has been steadily growing its global reach over the past four years in key growth markets such as China, Eastern Europe and now Brazil," said Robert Baird, CEO and Group President, Cannondale Sports Unlimited. "The addition of Caloi to our already strong portfolio of brands and global presence will help us achieve our goal of seeing our brands in every household, creating inspired experiences and improving the health and wellness for consumers around the world.
"Caloi's strong management team, its large distribution base and local production capabilities will accelerate the development of Dorel's bicycle brands in Brazil and benefit Brazilian consumers who will be able to access Dorel's strong international brands. The Caloi brand will also benefit from our technologies and expertise in building high performance cycling products," added Baird.
Caloi's Eduardo Musa celebrates the new partnership as "the conclusion of several years of work to transform Brazil as a real player in the worldwide bicycle industry. The Caloi/Dorel partnership will strongly benefit the Brazilian bicycle market. The expansion of Dorel's bicycle brands in our market will help meet the increasing demands of the Brazilian consumer for high quality, matched with innovation and style."
Caloi is supporting the leading Brazilian athletes in their preparation for the Olympic Games to be held in Rio de Janeiro in 2016. Its mountain bike team - the Caloi Elite Team - is the only UCI registered mountain bike team in Brazil.
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 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 has annual sales of US$2.5 billion and employs 5,400 people in facilities located in twenty-four 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.
For further information:
Dorel Industries Inc.