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Dorel expands in Asia with the acquisition of Lerado

The firm is based in Hong Kon


Dorel Industries 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 purchase price has been established at HK$930 million (US$120 million).

"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.

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.

Beyond enhanced manufacturing capabilities, Lerado has established a modern R & D centre based in Taiwan which will complement Dorel's existing teams. It is also expected that the acquisition will accelerate the firm's plans to grow in the Asian market place, an area of opportunity that thus far has been under exploited.

The acquisition includes four new extensive facilities, of which three are based in China with one based in Taiwan. The total assets acquired encompass over 2.5 million square feet of modern production, research and development and testing resources as well as office space. Included are two fully integrated campuses in Zhongshan, China housing the headquarter factory and offices, as well as a number of independent buildings for production and employee accommodations. There is also a recently built factory in Huang Shi, China.

"These new facilities will complement our existing facilities worldwide and will allow us to best service Dorel's existing customer base. We also look forward to continuing to supply Lerado's current customers at a service level that they have come to expect from Lerado," concluded Mr. Schwartz.

The transaction is subject to regulatory review as well as approval by the shareholders of Lerado and it is anticipated to close in the fourth quarter. The acquisition is not expected to be accretive to earnings in the first year of operations as work will be required to integrate these new facilities into existing operations.

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