The Lerado facility in Zhongshan, China.
The Lerado facility in Zhongshan, China.

MONTREAL - Dorel Industries Inc. has signed an agreement to acquire the juvenile business of Hong Kong-based Lerado Group, one of the largest juvenile product manufacturers in China. The acquisition will give Dorel its first company-owned factory in Asia.

The $120 million (HK $930 million) transaction is expected to close in the fourth quarter, subject to regulatory review and stockholder approval. Lerado is a subsidiary of Lerado Group (Holding) Co. Limited, a publicly traded company listed on the Hong Kong Stock Exchange.

Dorel President & CEO, Martin Schwartz said the acquisition will give Dorel greater control over its supply chain while enabling it to grow market share in Asia. "This is a sound investment in our future to ensure that going forward we control our own destiny," he said. "This venture will allow us to be more flexible in an increasingly changing environment."

Schwartz said Dorel will continue to purchase other juvenile products from its existing Asian suppliers.

"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.

In a June 17 filing, Lerado Group blamed a slow economic recovery in the U.S. and Europe, combined with declining birth rates, higher operating costs in China and the continued appreciation of its currency, for the recent decline in profits experienced by the juvenile products division. Sales to the U.S. and Europe accounted for 75% of its total revenues, Lerado Group reported.

Included in the acquisition are four new facilities for Dorel, three of which are based in China with one based in Taiwan. The total assets encompass more than 2.5 million square feet of space, including production, research and development, testing resources and offices. Included are two fully integrated campuses in Zhongshan, China housing the headquarter factory and offices, as well as independent buildings for production and employee accommodations, plus a recently built factory in Huang Shi, China.

Dorel (TSX: DII.B DII.A) offers juvenile products, home furnishings and bicycles. The company has annual sales of $2.4 billion and employs approximately 6,400 people in facilities located in 25 countries worldwide.

Dorel's furnishings division offers RTA and home office furniture, including such brands as: Ameriwood, Cosco Home and Office (COSCO), Dorel Home Products (DHP) Dorel Asia and Altra. Included in the juvenile products portfolio are such brands as : Maxi-Cosi, Safety 1st, Bebe Confort, Quinny, Tiny Love, Cosco, Infanti, Baby Art, Monther's Choice and Voyage.

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