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Dorel Acquires UK Distributor

Published October 1, 2009

MONTREAL, Quebec (BRAIN)—Dorel Industries Inc. has acquired assets of UK-based Hot Wheels and Circle Bikes, UK’s preeminent distributors of the Mongoose and GT brands.

This latest purchase is in line with Dorel’s aggressive growth strategy of its Recreational/Leisure segment and is the third transaction in just two months. In parallel with this deal, a new subsidiary, to be known as Cycling Sports Group UK (CSG UK), is being created to drive the future growth of Mongoose and GT. CSG UK will be dedicated to the Independent Bike Dealer (IBD) channel.

Hot Wheels has a portfolio of top selling, innovative bicycle products and components, which are marketed to retail and leisure outlets throughout the UK. Circle Bikes owns the popular Charge brand. Combined sales for the fiscal year ended August 31, 2009 were approximately £14 million (approximately US$22.4 million), the majority of the revenue from Hot Wheels. EBITDA for the same period was £1.5 million (approximately US$2.4 million). Terms of the transaction are not being disclosed at this time.

To be located in Poole, Dorset, CSG UK will coordinate all sales, marketing, distribution and customer service to better support its growing network of dealers in the UK. The Mongoose and GT brands will be distributed immediately by the new subsidiary, followed by Cannondale in January 2010.

Robert Baird, president of Dorel's Recreational/Leisure segment said the creation of this newest subsidiary follows a similar initiative in Australia last month and underlines Dorel’s commitment to take control of its international bicycle brands in certain geographies and work closer with distributors in others in order to accelerate growth within the critical IBD channel.

“We have developed a multi-faceted strategy to grow our bike business into a global force and we are moving ahead decisively with this plan by leveraging our excellent portfolio of recognized brands and by investing in leaders in their respective markets. CSG UK will now be that much closer to the market and will react quickly to both dealer and consumer demands," he said.

CSG’s vice president of sales and marketing for Europe, Middle East and Africa (EMEA), Christophe Jouffret, said that there are numerous advantages to consolidating resources “in country” for all CSG brands. “We want to ensure full support for this latest subsidiary by increasing our ability to service and deliver product faster to our UK retailers as well as rapidly respond to market changes and opportunities," Jouffret said.

It was also announced that Russell and Neil Merry, the former owners of Hot Wheels and Circle Bikes, have been named co-managing directors of CSG UK. The two have been instrumental in furthering the development of the GT and Mongoose brands, not only in the UK but globally as well. “Dorel is fortunate to partner with Russell and Neil, both of whom bring a wealth of industry knowledge and experience with them,” Baird said.

“This is an exciting time and opportunity for growth in the global bicycle industry,” Merry said. “The UK has many positive factors favouring the industry with increasingly cycle friendly central and local government policies to help beat congestion, cut obesity rates and address environmental concerns. Neil and I recognised that our local knowledge and experience could take the business to the next level if we had the backing and global horsepower of Dorel. We believe that Dorel's CSG business is set to be one of the fastest growing bicycle companies in the world in what can only be described as a positive environment for the bicycle business.”

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