Dorel Industries, the Canadian group that owns bicycle brands from Cannondale to Schwinn, Mongoose and more, said it had acquired 70 percent of Caloi, the leading Brazilian bicycle maker. Caloi sells about one million bicycles in Brazil annually, amounting to an estimated 40 percent of the market in value, and it operates the largest bicycle factory outside Southeast Asia.
Caloi's turnover reached nearly 273.5 million reais (€86.8m-$114.7m) in 2012, up by 22 percent. Dorel's recreational division, consisting mostly of bicycles, reached sales of US$928 million last year, so the acquisition lifts its turnover in this business to more than $1 billion.
The sellers are Edson Vaz Musa, former chairman of Caloi's supervisory board, and Eduardo Musa, Caloi's chief executive. Dorel said the purchase price amounted to a high single-digit multiple of Caloi's Ebitda and the acquisition was expected to be immediately accretive to the Canadian group's earnings.
Established in 1898, Caloi was described as one of the oldest bicycle brands in the world and the largest in Latin America. It sells a wide range of bicycles, from cheaper urban bicycles to performance road bikes.
Employing 900 people, the company has its head office in São Paulo but manufacturing takes place in Manaus, where its plant has a capacity of more than 700,000 units per year. Another 300,000 bicycles are sourced from other Brazilian manufacturers, while Caloi itself also makes some bicycles for Décathlon in Brazil.
Caloi estimates that the Brazilian market amounted to about 4.3 million units in 2012. This implies that Caloi has a market share of about 23 percent in units, but its larger share in value is due to the average selling price of its bicycles, which is higher than the market's average.
Dorel said that Brazil would turn into a production hub for its brands, which also include Mongoose and GT. The manufacturing facility in Manaus is meant to cover demand in Brazil as well as export markets. Musa is to become Brazil president of Dorel's bicycle business and he will join its global management team.
Up until the Caloi acquisition, Dorel sold its Cannondale brand in Brazil though a distributor; and GT through a deal with Grupo SBF, the leading sporting goods retailer in Brazil with the Centauro chain; while neither Schwinn nor Mongoose are on the market. Dorel's plan is to distribute the entire brands package of its leisure unit, which was renamed Cannondale Sports Unlimited earlier this year, through a new company, CSU-Brazil. At the same time, Caloi should benefit from the Canadian group's strength in technology at the higher end of the market. Dorel has already been directly active in Brazil since 2009 through a unit focusing on children's products.
