MONTREAL – Publicly traded RTA and youth furniture specialist Dorel Inds. said Friday it has entered a definitive agreement to take the company private through the sales of shares to an affiliate of Cerberus Capital Management and members of the company’s leadership team.

Based on the recommendation of an independent committee of Dorel’s board of directors, the buyer group led by the Cerberus affiliate would acquire for C$14.50 per share in cash, all of Dorel’s issued and outstanding Class A Multiple Voting Shares and Class B Subordinate Voting Shares.

This excludes an aggregate of 4,009,410 Class A Multiple Voting Shares and 2,573,503 Class B Subordinate Voting Shares owned by Martin Schwartz, president and CEO; Jeffrey Schwartz, executive vice president and chief financial officer; Alan Schwartz, executive vice president, operations; and Jeff Segal, executive vice president, sales and marketing as well as members of the immediate families.

The C$14.50 per share purchase price represents a 32% premium of the C$11.02 closing price of Dorel’s Class B Subordinate Voting Shares on the Toronto Stock Exchange of Sept. 4, the date that family shareholders granted exclusivity to Cerberus. It also represents a 19% premium to the 60-day volume weighted average trading price and a 7% premium to the 30-day volume weighted average trading price of Dorel’s Class B Subordinate Voting Shares on the TSX for the periods ended Oct. 30.

The company added that the purchase price also is within the range of fair market value for the shares of C$14 to C$17 per share as of Nov. 12, as determined in a written valuation report by TD Securities.

“We are very pleased to partner with the Family Shareholders in this transaction,” said Scott Wille, senior managing director at Cerberus. “Dorel has a long and successful history based on its entrepreneurial culture. We are excited to collaborate with Dorel’s talented and dedicated managers and employees across all three of their business segments to further accelerate growth and enhance each segment’s leadership position.”

Dorel’s board of directors, which acted on a recommendation of the independent committee, said the arrangement is in the best interest of Dorel and also is fair to non-family shareholders. It unanimously approved the arrangement and unanimously recommends that the public shareholders vote in favor of the arrangement at an upcoming shareholders meeting.

Norman M. Steinberg, chair of the special committee, said, “Today’s announcement is the culmination of a comprehensive process that began in December 2019 when the Family Shareholders informed the Dorel board of directors of their intention to initiate a process to find a partner to take Dorel private. Over a period of 11 months, the special committee, with the advice of independent financial and legal advisors, has overseen and supervised this process, including contacting more than 25 potential financial sponsor partners, providing diligence materials to such partners, reviewing and considering non-binding proposals submitted by certain of these parties, and negotiating the financial and legal terms of the transaction proposed by the buyer group.

“The special committee believes that the arrangement represents fair value for the public shareholders and is the best path forward for Dorel and all of its stakeholders. We are pleased to have been able to reach this agreement with the buyer group at a time when Dorel is benefitting from increased demand for its products amid the unique backdrop of 2020.”

Martin Schwartz added, “The family shareholders believe that the arrangement is a win for all of Dorel’s stakeholders, including the public shareholders. This transaction will enable Dorel to continue to serve our employees, business partners and other stakeholders, and positions Dorel on a path for continued growth.”

The company said the cash consideration to be paid to the public shareholders will be financed through a combination of cash funded by the buyer group and by Koch Equity Development LLC (KED) and committed financing from a group of lenders.

The post Dorel Industries enters definitive agreement to take company private appeared first on Furniture Today.

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