Dorel Industries enters agreement to acquire juvenile furniture business of Hong Kong-based manufacturer Lerado Group for US$120M; venture providing Dorel's first company-owned factories in Asia will provide direct control of supply chain, says CEO
June 16, 2014
– Dorel Industries Inc. (TSX: DII.B,DII.A) today announced that it has signed an agreement to acquire the juvenile business of Hong Kong-based Lerado Group, one of the largest juvenile product manufacturers in China, specializing in the design and manufacture of a wide range of infant and juvenile products. The Lerado Group is a subsidiary of Lerado Group (Holding) Company Limited, a publicly traded company listed on the Hong Kong Stock Exchange. The purchase price has been established at HK$930 million (US$120 million), subject to adjustments, and will be due upon closing.
“This is a sound investment in our future to ensure that going forward we control our own destiny. This venture will allow us to be more flexible in an increasingly changing environment. It has become more important than ever to be vertically integrated and be in direct control of our supply chain,” stated Dorel President & CEO, Martin Schwartz.
“Dorel has built its juvenile business into a global player by focusing on several key pillars; great quality products, diversity of strong brands and a strong distribution model. Now with these additional excellent facilities in Asia, our strategy to maintain and grow our leadership in the industry is further strengthened,” added Dorel Juvenile Group President & CEO Jean-Claude Jacomin.
Mr. Schwartz emphasized that even though Dorel will operate its own manufacturing network, it will continue to purchase other juvenile products from existing Asian suppliers with whom relationships have been built over time.
The purchase will provide Dorel with its first company-owned factories in Asia. It is expected that the current management overseeing the facilities will remain with Dorel and will be joined by additional Dorel employees. They will work closely with existing product development teams at the Company’s various juvenile divisions, as well as with existing staff at Dorel’s quality control and customer support offices located throughout China. Dorel will benefit from Lerado’s consistent investment in new facilities and technology, including a recently constructed car seat crash test laboratory similar to those owned by Dorel in the US and Europe.