MONTREAL — Dorel Industries Inc. says it will continue to pursue its business strategy going forward after terminating an agreement to go private after discussions with shareholders.
"Moving ahead. Business as usual," a spokesman for the company said in an email on Monday.
A group led by Cerberus Capital Management had previously agreed to buy outstanding shares of Dorel for $16 apiece, except for shares owned by the family that controls the company's multiple-voting shares.
But Dorel chief executive Martin Schwartz said the Montreal-based maker of car seats, strollers, bicycles and home furniture pulled the plug on a deal on the eve of Tuesday's special meeting after reviewing votes from shareholders.
“Independent shareholders have clearly expressed their confidence in Dorel’s future and the greater potential for Dorel as a public entity," he said in a news release.
Dorel's board of directors, with Martin Schwartz, Alan Schwartz, Jeffrey Schwartz and Jeff Segel recused, unanimously approved the deal's termination upon the recommendation of a special committee.
The transaction required approval by two-thirds of the votes cast, and more than 50 per cent of the votes cast by non-family shareholders.
Schwartz said enhancing shareholder value remains a top priority while it stays focused on growing its brands, which include Schwinn and Mongoose bikes, Safety 1st-brand car seats and DHP Furniture.
Dorel said the move to end the go-private deal was mutual, despite the funds' increased purchase price offer earlier this year.
It said there is no break fee applicable in this case.
Montreal-based investment firm Letko, Brosseau & Associates Inc. and San Diego's Brandes Investment Partners LP, which together control more than 19 per cent of Dorel's outstanding class B subordinate shares voiced their opposition to the amended offer, which was increased from the initial Nov. 2 offer of $14.50 per share.
"We believe that several minority shareholders shared our opinion," said Letko vice-president Stephane Lebrun, during a phone interview.
"We are confident of the long-term potential of the company and we have confidence in the managers in place.”
Lebrun said Letko Brosseau had no contact with Cerberus during the process. Dorel's second largest shareholder also does not intend to demand changes despite the events of recent months.
"For the shareholders and the family, who are also shareholders, we believe that the best thing to do here is for (management) to continue their work."
Shareholder advisory firms Glass Lewis and Institutional Shareholder Services had recommended Dorel Industries Inc. shareholders vote against the revised proposal.
Glass Lewis described the increased offer as "a more pragmatic reassessment of the company's erstwhile effort to buttress the fundamental privatization narrative," but said it still failed to mitigate its core concerns.
This report by The Canadian Press was first published Feb. 15, 2021.
— With files from Julien Arsenault.
Companies in this story: (TSX: DII.B, DII.A)
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