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Dorel to Buy Schwinn Maker

January 14, 2004|From Reuters

Dorel Industries Inc. sprinted to the front of the U.S. bicycle industry Tuesday with a $310-million deal to buy Pacific Cycle, makers of the well-known Schwinn brand.

The Montreal-based maker of furniture and children's products including car seats and baby strollers said it would buy Wisconsin-based Pacific Cycle, the biggest seller of bicycles in the U.S., in an all-cash deal.

Dorel said its agreement with Wind Point Partners, a private U.S. equity investment firm, would be financed with additional debt. The deal is expected to close later this month.

"For Dorel, I think it's a fit," said John McIlveen, retail analyst for Salman Partners Inc.

"On the surface, bicycles may not seem like a fit, but Dorel is a consumer products [maker] that distributes through mass-merchant channels products manufactured in Asia, so that fits this bill."

Pacific Cycle, with annual sales of more than $325 million, has 27% of the U.S. bicycle market, including 44% of sales in the mass-merchandise sector.

Pacific Cycle will be run as a stand-alone division and most of its current management will remain in place, Dorel said.

Dorel shares rose $3.63 to $31.48 on Nasdaq.

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