A move by U.S. private equity giant Cerberus Capital Management to sweeten its offer for Canadian consumer goods company Dorel Industries Inc. has failed to sway two key shareholders.
Montreal investment management firm Letko, Brosseau & Associates on Tuesday reaffirmed its opposition to the proposed takeover, in which Cerberus would take Dorel private together with the company’s controlling shareholders, the Schwartz and Segal families. Cerberus on Monday announced it would raise its offer for Dorel by 10 per cent, to $16 a share.
With the sweetened bid, the total value of the transaction including assumed debt jumps to about US$1-billion.
The revised offer is “opportunistic” and continues to “significantly undervalue” Dorel, Letko said in a statement. “We strongly believe in the long-term potential of the company.”
San Diego-based Brandes Investment Partners also said in a statement it continues to oppose the deal for largely the same reasons. Together, Letko and Brandes hold about 19.2 per cent of Dorel’s Class B subordinate voting shares.
A vote on the proposed transaction is scheduled for Feb.16. To pass, it needs support by holders of two-thirds of the votes cast and by a simple majority of investors holding the subordinate voting shares.
Proxy advisory firm Glass Lewis has published a report urging shareholders to reject the proposed transaction. It says: “There is currently little cause for investors to support what appears to be a questionably timed and ultimately undervalued buyout.”
Dorel operates three separate business arms that are each very different. Its sports unit controls bike brands such as Cannondale and Schwinn, while its juvenile unit makes car seats, strollers, toys and other children’s products under brands including Maxi-Cosi and Quinny. The third division makes and distributes home furniture.
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