Dorel acquires Carina
By Michael J. Knell -- Furniture Today, September 29, 2003
Montreal — Dorel Inds. has acquired Toronto-based Carina Furniture Inds., a fast-growing manufacturer of ready-to-assemble furniture.
Dorel said the acquisition will boost its RTA sales to approximately US$317 million and should strengthen the company's presence in retail sectors where it has not had a solid share of the market, particularly office superstores.
The purchase price wasn't disclosed. Publicly held Canadian powerhouse Dorel said Carina will add 2 cents (U.S.) to its earnings per share this year.
"This is a highly strategic complement to our current RTA furniture operations," Martin Schwartz, Dorel president and chief executive officer, told analysts in a conference call. "Carina has excellent relationships in the office superstore and do-it-yourself retail chains in both the United States and Canada, and opens markets where traditionally we have not been strong.
"A consistent strength of Dorel has been our ability to create solid distribution channels and then use them to efficiently market new product lines. Carina adds exciting new opportunities for the company at a time when the RTA furniture market is consolidating."
Founded about 20 years ago by Irvin Weitzman, Carina operates a 300,000-square-foot factory in Brampton, Ontario, just west of Toronto. It makes a variety of storage and furniture products under the Carina and SystemBuild labels. Schwartz praised Carina for its technological capabilities, including the latest in computerized design and production, which are geared to provide quality mass production with maximum flexibility.
Carina's key retail accounts include Lowe's, Menards, OfficeMax, Staples, Home Depot, Home Hardware and Wal-Mart Canada.
"They're growing with the office superstores," Schwartz said, admitting Dorel has had a tough time breaking into that channel of distribution.
Gaining access to certain channels was a key factor in Dorel's decision to acquire the company, he told the analysts, adding this is a different type of acquisition than when Dorel acquired French juvenile products maker Ampa earlier this year.
"Ampa was much more about product. This was much more about the channels," he said.
Carina had sales of about US$60 million in the fiscal year ended July 31, up 40% from the previous year.
"The whole RTA market isn't booming," Schwartz said. "Carina is the only company that has grown its sales significantly in the past two years."
He attributed that to Carina's sales, marketing and product development people, all of whom are expected to remain with the company. The role of Weitzman is undetermined, he said.
Carina's operations will be integrated into Ameriwood, Dorel's RTA furniture division.
Dorel said the purchase is being financed through internally generated cash flow and from existing lines of credit and won't require additional financing.
"The timing of this latest acquisition could not be better," said Schwartz. "The existing retail environment has created an excellent opportunity for such a purchase, and our strong financial situation allows us to move forward with the deal. We are confident that we will gain important market share and, as such, anticipate a stronger second half in our home furnishings segment."
Dorel will show Carina and SystemBuild product at next month's High Point market.
