Letko Brosseau and Brandes to oppose Dorel privatization despite sweetened offer

·2 min read

MONTREAL — Two large shareholders of Dorel Industries Inc. say they will vote against a proposal to take the company private despite a move by Cerberus Capital Management LP to raise its offer.

Montreal-based investment firm Letko, Brosseau & Associates Inc., which controls 12.2 per cent of Dorel's outstanding class B subordinate shares, said Tuesday the offer "continues to significantly undervalue the company."

Letko Brosseau said it has been a long time shareholder of Dorel and believes in the long-term potential of the company, noting that the Schwartz family plans to remain shareholders under the deal to take the company private.

Brandes Investment Partners LP of San Diego, which owns about seven per cent of Dorel's shares, also said Tuesday it will oppose the deal.

"Brandes continues to believe in the long-term upside potential of Dorel's shares," it said in a news release, also pointing to the Schwartz family plans.

The Schwartz family, including Dorel CEO Martin Schwartz, control about 20.3 per cent of Dorel's outstanding shares on an economic basis and 60.8 per cent on a voting basis through their ownership of the company's class A and class B shares.

The buyer group led by Cerberus, which has the support of Dorel's board, raised its offer for the shares not held by members of the Schwartz family to $16 per share on Monday in an attempt to win support from reluctant shareholders. It had earlier reached a deal for $14.50 per share.

"We believe that the revised offer of $16.00 per share by Cerberus and the family shareholders is opportunistic and continues to significantly undervalue the company," Letko Brosseau said in a news release.

It also noted that investor advisory services firm Glass Lewis had recommended against the initial offer.

Dorel, which makes a variety of consumer goods such as Cosco and Safety 1st child car seats, Cannondale and Schwinn bicycles, and furniture, will hold a special meeting of shareholders on Feb. 16 to vote on the proposed deal.

The transaction needs approval by two-thirds of the votes cast, and more than 50 per cent of the votes cast by non-family shareholders.

This report by The Canadian Press was first published Feb. 2, 2021.

Companies in this story: (TSX: DII.B, TSX:DII.A)

The Canadian Press