Tuesday, February 5, 2008

Cannondale purchased by Dorel

Thats right Cannondale has been purchased by Dorel, owner of Pacific Cycle parent company of Schwinn, GT, and Mongoose. This is new development for a company with a shacky past, after an unsecfull attempt to make a bid into the world of cycle motor sports which drove the company to seek bankruptcy protection in 2003. However, management was able to quickly sell the company off to the private equity firm Pegasus Partners, which supported the company's renewed focus on bicycle production. More recently the company also issued a recall of lefty forks.

"Dorel Industries’ purchase of Cannondale now positions the Canadian consumer goods company right behind Trek and Specialized within the independent bicycle dealer (IBD) channel, according to Dorel president and chief executive officer Martin Schwartz."

“We hope to be the No. 3 player in North America with this transaction,” Schwartz said. “Our goal is to be No. 1 in the IBD channel.”

The all-cash deal worth $190-million (U.S) to $200-million (subject to Cannondale's earnings results for the year ending June 30, 2008) sent Dorel stock soaring yesterday to 6.5 percent—its highest level in two months. Schwartz said the deal will add more than 9 cents (U.S.) a share to its annual earnings."

Many Cannondale owners and anyone who is still loyal to the brand probably wonder what this means for the company. The offical statments form Dorel says that Cannondale will contiue with “business as usual” and that “Cannondale will be the crown jewel of this division,(of Dorel) ”. Weather that is true or not remains to be seen. One of my professor in college was an in house graphic designer for GT in Lake Forest before they got bought out by Pacific Cycle. After the company was acquired his whole office was basically shut down and all the employees were laid off. As far as he was concerned the company GT that he had passionately worked for was dead to him. It seems now only time will tell. The only other question I can ask myself is, if Cannondale dies a slow death, will anybody really miss them?

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