Dorel acquires Cannondale Bicycle Corporation
Dorel acquires Cannondale Bicycle Corporation - Two distinct bicycle divisions to be created
EXCHANGES TSX: DII.B, DII.A
- High performance bicycles known worldwide
- Transaction reinforces Dorel's focus on core businesses
- Purchase is immediately accretive to earnings
MONTREAL, Feb. 4 /CNW Telbec/ - Dorel Industries Ltd. (TSX: DII.A,
DII.B) today announced it has acquired the Cannondale Bicycle Corporation, a
leading designer, developer and manufacturer of high-end bicycles.
Headquartered in Bethel, Connecticut, Cannondale has facilities in Bedford,
Pennsylvania as well as offices in Canada, Switzerland, Holland, Japan, and
Australia. Widely regarded as the bike industry's leading innovator,
Cannondale's handcrafted bicycles have won numerous design awards and are sold
in over 70 countries. The purchase also includes Sugoi Performance Apparel.
Sugoi products are used worldwide by runners, cyclists, triathletes and
fitness enthusiasts who demand the best apparel available.
The total value of the all-cash transaction will be US$190 to
US$200 million, subject to Cannondale's earnings results for the year ending
June 30, 2008. The transaction, which will be immediately accretive to Dorel's
earnings, is being financed through debt. Cannondale and Sugoi are being
purchased from an affiliate of Pegasus Capital Advisors, which acquired the
company in 2003. 2007 sales for Cannondale and Sugoi were approximately $200
A clear strategy for the IBD category
Dorel President and CEO, Martin Schwartz stated that in light of the
acquisition the Company's Recreational/Leisure segment is being split into two
distinct operating divisions. A new Dorel Independent Bicycle Dealers (IBD)
division, the Cannondale Sports Group, is being created and will focus
exclusively on this category with premium-oriented brands. Backed by Dorel's
extensive resources, the Cannondale Sports Group will build on Cannondale's
strengths to grow significantly within the IBD channel. "Our intention is to
build a world-class company that dealers will want to buy from," said
Mr. Schwartz. Pacific Cycle will become a stand-alone division with an
exclusive focus on mass merchant customers.
"The Cannondale purchase is consistent with Dorel's plan to concentrate
on its core businesses. Since buying Pacific Cycle in 2004 we have learned a
great deal about the bicycle industry and have found it to be a true value
driver for Dorel. We are committed to pursuing this sector, and this important
transaction will position us globally in a most material way. Dorel recognizes
the importance and potential of the Independent Bicycle Dealer channel and is
purchasing Cannondale as the first step to become the world's number one IBD
player. Cannondale will be the crown jewel of this new Dorel division, which
will seek additional such growth opportunities."
Note: Please refer to the separate release issued today "Dorel Creates
Two Distinct Bicycle Divisions Following Cannondale Acquisition".
"We're excited about the future for Cannondale and our retailers.
Cannondale's goal is to be the number one supplier to the IBD channel. Dorel's
vast resources and experience provide us with long term stability and the
ability to accelerate our goals for growth with our retailers," stated Matt
Mannelly, President and CEO of Cannondale.
A history of innovation, a record of wins
Cannondale has come a long way since its establishment in 1971, when it
introduced the cycling industry's first bicycle trailer. The company grew
quickly, adding cycling apparel and accessory lines while earning a strong
reputation for innovation and quality. Cannondale raised the cycling world's
eyebrows by equipping its bicycles with handcrafted aluminum frames that were
both lighter and more flex-resistant than the steel models that dominated the
industry at the time.
Many of the ideas that keep Cannondale products on the cutting edge come
from the sponsored athletes on the Company's professional racing teams.
Cannondale has an outstanding heritage in competitive cycling and has
consistently been on the leading edge of sports marketing. Cannondale bikes
have been powered to multiple stage wins in the Tour De France and have won
4 overall Giro d'Italia titles alongside countless World Cup Wins and World
Championship titles off road. Today Cannondale continues to push the envelope
in bicycle innovation and material expertise and is the bike of choice for the
Liquigas Pro Cycling Team, Cannondale Vredestein professional mountain bike
team, along with mountain bike legend Tinker Juarez and a host of other world
class professional cyclists and triathletes.
Mr. Schwartz stated that Dorel's Recreational/Leisure segment has an
enormous opportunity to capitalize on the changing mindsets and trends around
the world. "Increasingly, people are actively engaged in seeking healthier
lifestyles; are concerned about the environment, and want to do something
about it; and desire sustainability at all levels. We sincerely believe our
products can help meet these objectives. This transaction underlines our plan
to further unlock value within the Company, concentrating on the
Recreational/Leisure and Juvenile segments which provide the greatest
Dorel Industries Inc. will hold a conference call to discuss the
Cannondale acquisition today at 10:30 A.M. Eastern Time. Interested parties
can join the call by dialling 1-800-732-9307. The conference call can also be
accessed via live webcast at www.newswire.ca or www.q1234.com. If you are
unable to call in at this time, you may access a tape recording of the meeting
by calling 1-877-289-8525 and entering the passcode 21261172# on your phone.
This tape recording will be available on Monday, February 4, 2008 as of
12:30 P.M. until 11:59 P.M. on Monday, February 11, 2008.
Media interested in interviewing Dorel senior management today should
contact Rick Leckner at 514-731-0000. Photo opportunities will also be
Dorel Industries (TSX: DII.B, DII.A) is a global consumer products
company engaged in the designing, manufacturing and marketing of a diverse
portfolio of powerful consumer brands, sold through its Juvenile,
Recreational/Leisure and Home Furnishings segments. Headquartered in Montreal
and with significant operations in the United States and Europe, Dorel employs
approximately 4,700 people in 15 countries. Annual sales are US$1.8 billion
and are made in over 60 countries worldwide.
US operations include Dorel Juvenile Group, which markets the Cosco and
Safety 1st brands as well as Eddie Bauer and Disney Baby licensed products;
Pacific Cycle, which markets several brands including Schwinn, Mongoose, GT,
InSTEP, Playsafe and Roadmaster; and Ameriwood Industries, which markets
ready-to-assemble furniture products under the Ameriwood, Carina, SystemBuild,
Altra Furniture and Ridgewood brands; Cosco Home & Office, which markets
home/office products under the Cosco brand and Samsonite license as well as
home healthcare products under the Cosco Ability Essentials and Adepta brands.
In Canada, Dorel operates Dorel Distribution Canada, Ridgewood Industries and
Dorel Home Products. Dorel Europe markets juvenile products throughout Europe,
under the Bébé Confort, Maxi-Cosi, Quinny, Safety 1st, Babidéal, Mon Bébé and
Baby Relax brands. Dorel Asia sources and imports home furnishings products.
Dorel is the majority owner of In Good Care (IGC), a manufacturer and
distributor of juvenile products in Australia, whose two principal brands are
Bertini and Mother's Choice. Dorel also has eight offices in China,
headquartered in Shanghai, which oversee the sourcing, engineering and
logistics of the Company's Asian supplier chain.
Founded in 1971, Cannondale is a global designer, developer and
manufacturer of high performance bicycles apparel and accessories. With a
strong reputation for continuous innovation and quality the company is
headquartered in Bethel, Connecticut, USA with offices in Canada, Holland,
Japan, Switzerland, Australia, and a manufacturing facility in Bedford,
About Pegasus Capital Advisors
Pegasus Capital Advisors, L.P. is a private equity fund manager that
provides creative capital solutions to middle market companies across a wide
variety of industries. Established in 1995, Pegasus manages over $1.8 billion
in assets through several private equity funds and has made close to
70 investments since its inception. It is currently pursuing initiatives in
several key sectors, including renewable and conventional energy, all-natural
human and pet foods, alternative building materials, LED lighting, homeland
security, niche consumer products and business services, as well as
investments associated with sustainable business solutions for companies in
other industries. The firm employs over 50 investment and advisory
professionals working out of main offices in Cos Cob, CT and New York City.
Caution Concerning Forward-Looking Statements
Except for historical information provided herein, this press release may
contain information and statements of a forward-looking nature concerning the
future performance of Dorel Industries Inc. These statements are based on
suppositions and uncertainties as well as on management's best possible
evaluation of future events. The business of the Company and these
forward-looking statements are subject to a number of risks and uncertainties
that could cause actual results to differ from expected results. Important
factors which could cause such differences may include, without excluding
other considerations, increases in raw material costs, particularly for key
input factors such as particle board and resins; increases in ocean freight
container costs; failure of new products to meet demand expectations; changes
to the Company's effective income tax rate as a result of changes in the
anticipated geographic mix of revenues; the impact of price pressures exerted
by competitors, and settlements for product liability cases which exceed the
Company's insurance coverage limits. A description of the above mentioned
items and certain additional risk factors are discussed in the Company's
Annual MD&A and Annual Information Form, filed with the securities regulatory
authorities in Canada and the U.S. The risk factors outlined in the previously
mentioned documents are specifically incorporated herein by reference. The
Company's business, financial condition, or operating results could be
materially adversely affected if any of these risks and uncertainties were to
materialize. Given these risks and uncertainties, investors should not place
undue reliance on forward-looking statements as a prediction of actual
For further information: MaisonBrison, Rick Leckner, (514) 731-0000;
Dorel Industries Inc., Jeffrey Schwartz, (514) 934-3034
View our Fact Sheet
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Ah well, it was a fun ride, gosh I love "positive marketing spin" blah blah blah...... Here come the McCannondales
Well, at least cannondale is supposed to be separated and a stand alone....(Yeah right).....But I guess Juvenile segment means cheap, asia produced frames...
We'll see how it goes.....
I guess now would be the best time to buy a couple more frames, 'cause I think the MADE IN USA sticker will soon be a thing of the past...
"Common sense isn't always that common!"
Custom Prophet and Custom Delta V
Montreal? Does it mean I can visit the headquarters on my lunch break now? I should go give my resume and apply to be a consultant or something.
Let's wait and see. From what I gather, Pacific (GT, Mongoose...) will be the mass market brands and Cannondale will remain High End... and if they want to position Cannondale like they seem to (or want the public to think to), they will probably let Cannondale keep on doing what they do: innovate, make quality products for the passionnates... Again, we'll see how it goes in the long term.
A sad day for a lad that grew up 20 minutes from the factory in Bedford, PA. I remember stopping by the factory on numerous occasions before or after a ride. The guys were always available to answer tech questions and to shoot the sh*t. Time will tell, but I am thinking that the writing is on the wall.
I know that Schwinn and Mongoose still try to have upper lines, but their prestige is long gone. At least I will be able to take my Cannondale to Walmart for servicing?!
I am hopeful that this won't go the way things went with GT but I am still sore from that disaster..
Here is a letter form the boss man:
We have some excellent news regarding our future with you! Cannondale Bicycles has been purchased by Dorel Industries and will be the crown jewel in a newly formed IBD division "The Cannondale Sports Group."
Dorel recognizes Cannondale's brand strength, product superiority and potential for growth in your stores. This Cannondale Sports Group is being created to focus exclusively on this category with premium-oriented brands and provides Cannondale with long term stability to excel at what we do best. Backed by Dorel's extensive resources, this division will build on Cannondale's strengths to grow exclusively within the IBD channel. Our intention is to continue to build the world-class company you want to grow your business with.
Dorel's purchase of Cannondale is the first step to become the world's number one IBD player and Cannondale as the brand of choice. Pacific Cycle will become a stand-alone division with an exclusive focus on mass merchant customers.
We've come along way in the past five years and wouldn't be at this exciting point without your dedication and support. Dorel is investing in the success that you helped us build and we're looking forward to them investing in the tools that 'will help us help you' grow your business in the future.
Leadership and employees aren't changing at Cannondale. Our Cannondale passion to support the Independent Bicycle Dealers remains as strong as ever! What this means for you is a continued focus on ground breaking product and greater service to go along with it. It's business as usual at Cannondale-supplying you with the best damn product in the industry.
..I'd rather be a headlight on a northbound train..
It sux that Cannondale sold-out. I know they were hurting financially, for quite some time. I cannot understand why........they sell so many high priced bikes! If Cannondale is left to operate autonymously- then things could be the same as now. What concerns me about Dorel is that I hope they are not the corporate giant with deep pockets......but with [I][B]short arms!
This bites! I was just getting ready to pull the trigger on a F29er. One thing I really liked about it was the Made in USA branding. My current employer is hell bent on sending as much work as they can to India and I was hoping to do my part to keep America employed by buying a quality American made product. Now I'm not so sure. Looking at www.dorel.com doesn't inspire me with confidence. I get the sinking feeling this is another of those "buy the brand and ship the manufacturing overseas" companies.
F........ we will just have to wait and see. its a big company that got them, so maybe more money to develop. but also that means they have more overhead now.
This isn't really bad news. Look at what has happened to GT after they were bought buy this group. The bikes they have out now are they best and sickest they ever have and i doubt seriosuly that they would have been able to produce these models w/o the captial from Dorel.
When Dorel took over GT not one engineer or deisgner was let go or replaced by an outsider. They baiscally received and influx of cash and other much needed resoruces and told to take it up a notch. Imagine if c-dale took it up a notch.
Let's wait and see what happens. My hopes are that this will allow for more high end model production based out of the USA, lower bike cost, and with better buying power for some pretty sweet build options in the future.
one pedal stroke at a time
Wait a minute guys. First, Cannondale had already been 'bought' a while ago by Pegasus, they haven't 'sold out' just now. Is Dorel any better or worst than Pegasus? At least they already have bike companies so they have a bit of knowledge about the industry and hopefully, they know the place Cannondale has and should keep in the industry.
Second, GT, Schwinn and Mongoose went down and hard before they were bought by Pacific and are now doing much better than they were before, in fact, they can be thankful they were saved by Pacific/Dorel. They have only improved as brands and products since 2004 and have had a lot more money for R&D and testing since, they now have much better products and are much better buisnesses than before Pacific/Dorel bought them... And it seems like Dorel wants Pacific to still be the mainstream, Wal-Mart or sport chain stores style bikes and Cannondale will be separate from the Pacific brands... The day we'll see a Cannondale in a Wal-Mart is not here fellows.
Stopping yourself to buy a Cannondale because of that is foolish if you ask me. You want a bike now? A good bike? Look at what's available now, not what you think maybe the company will do in years to come. If you buy a current F29 that is US made, it speaks to them. If people stop buying them, then they might change the vocation of the company because the current Cannondale don't sell. I don't care much if the company is owned by Pegasus or Dorel, as long as they let the designers and engineers at Cannondale do what they do: make great bikes, unique bikes that I think are the best in the industry. Will I stop myself buying a great bike? No. When they stop producing quality bikes I want, then I'll stop buying.
Last edited by Dan Gerous; 02-04-2008 at 10:12 AM.
Sounds good doesn't it?:
Originally Posted by Jeff Frehner, new Cannondale Sports Group President
If Dorel had any intention of leaving Cannondale's existing manufacturing here in the USA, they would have made that distinction. Conspicuously, there's no mention of that.
Do you really think that production will stay here now?? No way. The process to phase out, probably 99% of the manufacturing here (USA) will be ongoing from this moment on. Minus proto and pilot development bikes. . How do you think those manufacturing folks in Bedford, PA feel now??
"Handmade in China." I guess we'll see.
You do have a point. Buying the bike while it's still Made in the USA makes sense. Once it starts saying Made in China then I'd speak with my $s by not buying.
I've said it before and I'll say it again. Move the production out of the United States and Canondale looses its appeal to me. It's certainly not the only reason I buy Canondales, but it's the sensitive point- no matter how good and cheap a bike you can make overseas, my buying is equally fueled by quality and country of production.
There's not many things I can buy here that are made in my own country, where those who build them pay taxes to my government and I can be assured their working conditions are safe. Bike frames are one of those things. I can buy American cars, but I don't, because they don't meet my quality requirements, so this isn't blind patriotism. Hopefully things are changing there, and I look forward to my first American car.
So long as one American frame builder exists, I will support them. (If that fails, here's hoping I can at least buy from a Canadian company.)
Originally Posted by dweikert
If there's no domestic content, then it'll just be a price decision for me. I've been willing to pay a bit more for Cdales up till now (3 in the garage), but that's largely based on NOT being made in asia.
I like being able to buy a bike where the main component (frame) doesn't come out of the same factory as 5 other brands. Their Bedford factory is one of the main elements in their brand image as far as I'm concerned.
My C-Dale dealer is helping me with a warranty frame replacement. He was a Mongoose dealer when Mongoose was bought by Pacific/Dorel. Apparently during that deal warrantees were sent out lesser frames some of different sizes.
This could really suck from my perspective
That was exactly one of my thoughts. This is all speculation, but imagine the disappointment of having a current carbon Rush frame (err...Caad 5 track frame, Prophet4x), for instance, replaced under warranty with an outsourced frame?
Originally Posted by pedaler845
Sure, there are plenty of high end frames crafted in Taiwan, but when I purchased the carbon Rush, it was mostly because I wanted to support workers in the neighboring town, Bedford.
I understand that Cannondale is a business that must be profitable to survive. Nonetheless, I sure would have liked a commitment for the manufacturing to remain here... We shall see.
Last edited by xJAHx; 02-04-2008 at 12:30 PM.
I believe the carbon Rush frames were already made in asia.
Dorel makes their objectives very clear:
1) They want to be number 1 in sales - which is the same as saying
2) They want to make tons of money
What will they do to meet these objectives?
If shortcuts are necessary...
If labor is cheaper...
When a company's main objective is to increase its wealth...well that sounds like mass production to me. And that usually leads to a lowering of quality.
We really don't know what kind of people are in charge at Dorel. They may just have a heart, or they may just be a bunch of brainwashed marketeers in suits with $$ as their mantras.
For me at least, it's hard to trust a person whos main talk is about sales.
Cannondale is already #1 in my mind. All we can do is to continue to support the company that provides us with such goodies and backs them up(as long as they continue to do so).
I hate to break it to you but the current carbon Rush is in essence already an outsourced frame. It is already made in Taiwan. The wonderful workers in Bedford made your swingarm but that is about it. That doesn't mean it isn't a great bike, but there is a reason it doesn't say "Handmade in the USA" on it.
Originally Posted by xJAHx
Ok ok, substitute the wife's Prophet 4x or my Caad5 track frame in for carbon Rush in the above post! >: )
The letter to the retailers does state that there will be no change in employees at Cannondale. That could mean they dont mean to change anything in their US based operation, or it could mean nothing.
As far as mass marketed (i.e. walmart) bikes I dont see that happening. It would be business suicide for Dorel, as IBD's would en masse drop the brand. That is why only a few places carry Schwinn because they are also sold mass market.
I do foresee that they will have bikes under a 1K pricepoint built overseas, as with Cdale's lower end mountain bikes as you just cant compete with asian sourced frames at that level. We can just hope that the outsourced price point doesnt creep higher every year as occured with Trek.
Sounds like the typical hyped up marketing tripe every merger comes replete with, regardless of industry. It's meaningless to me. Actions, that's where the rubber hits the road, or, was it dirt....
Originally Posted by Dan Gerous
Yes but for now, all we can do is speculate, we'll see down the road, or, dirt, what direction Cannondale takes. But I don't see this acquisition as a bad thing and will keep riding Cannondales for as long as they come out with products I want backed by their warranty. And people like you who can work on Lefties if needed too of course.
Originally Posted by MendonCycleSmith
I suggest to wait until they start to make bad moves before we complain about bad moves they could make eventually... And if they don't we can just keep riding and discuss, help each other out, show our rides with pride and whatever we do here.