Dorel Industries Ltd. today announced it has acquired the Cannondale Bicycle Corporation, a leading designer, developer and manufacturer of high-end bicycles.


Headquartered in Bethel, Conn., Cannondale has facilities in Bedford, Penn. 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 $190 million to
$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 million.

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  rands. 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.”


“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 potential.”