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Dorel Industries Ltd. of Quebec has signed a purchase agreement to acquire Wisconsin-based Pacific Cycle, the owner of Schwinn, Mongoose and GT.
Dorel has offices in the UK, other parts of Europe and in Asia. The company’s divisions produce flatpack furniture, infant car seats, strollers, high chairs, toddler beds, and cribs. It also produces toddler playbikes, which may now be branded with the Schwinn name.
Pacific will be run as a stand-alone Dorel division. There are no planned management changes at Pacific.
Pacific Cycle was founded by Chris Hornung in 1977. He began his career in the bicycle industry while completing a degree in Economics. In 1980 he began importing bicycles directly from suppliers in the Far East and developed relationships with US mass merchants. He directed Pacific’s purchase of Brunswick Bicycles in 2000, as well as the bicycle assets of the Schwinn/GT Corporation in 2001. As part of the transaction, Dorel has established financial arrangements with key Pacific Cycle executives that will ensure management continuity and provide a powerful incentive to continue Pacific Cycle’s strong performance.
"Pacific Cycle sells more bicycles than anyone else in the U.S. bicycle industry and its portfolio of powerful brands is one of the strongest in the sporting goods industry. Its business model is very similar to ours and provides numerous opportunities to significantly strengthen Dorel’s position as a global consumer products company," said Dorel president and CEO, Martin Schwartz.
The total value of the all-cash transaction is $310 million. Pacific Cycle is being purchased from an investment group led by Wind Point Partners, a private U.S. equity investment firm. Pacific has been ‘for sale’ for some time.
Pacifie”s annual sales are in excess of $325 million and it has a 27 percent share of total US bicycle sales including 44 percent of the bicycle sales in the mass merchant sector.
"This transaction is consistent with our objectives and is aligned with Dorel’s strategy of growing our consumer goods to leverage the strong distribution channels that we have developed," said Schwartz.
"Pacific Cycle does in bicycles what Dorel has been doing for years in juvenile and home furnishings products. Both companies have developed high quality products through domestic design, overseas sourcing and intensive marketing through long-established retailer relationships. We intend to leverage Pacific’s powerful brands to create a platform for future growth in leisure and recreational products, including natural extensions in our juvenile segment.
"This is a very special day for Dorel. We have purchased a consumer products company with a great deal going for it, including some of the best known brands, powerful designs, established distribution channels, a highly motivated management team and strong cash flow. Most importantly, Pacific Cycle is an operation that is immediately accretive to earnings."
