A sweetened bid from Cerberus Capital Management LP and Dorel Industries Inc.’s founding family has failed to win over two of the toymaker’s top shareholders, who call the buyout bad for investors.

The new offer of $16 per Dorel share announced on Monday “is opportunistic and continues to significantly undervalue the company,” Montreal-based Letko, Brosseau & Associates Inc. said Tuesday in a statement. Brandes Investment Partners LP echoed those sentiments in a separate statement, saying it “continues to believe in the long-term upside potential of Dorel’s shares.”

Both firms vow to vote against the new bid, which represents a 10 per cent increase from an initial $14.50-a-share offer in November. Letko, Brosseau said it owns about 12.2 per cent of Dorel’s shares and Brandes said it holds about 7 per cent on behalf of investment advisory clients.

The fresh opposition is another hurdle for Cerberus and the Schwartz family, which founded Dorel in the 1960s. The company now makes Maxi-Cosi and Cosco brand car seats and strollers, Cannondale and Schwinn bicycles and Signature Sleep home furnishings.

‘Attractive Transaction’

Dorel traded at $15.33 as of 12:14 p.m. in Toronto, giving the Westmount, Quebec-based company a market value of about $497 million.

Dorel said the higher offer followed talks with investors holding more than 50 per cent of the company’s subordinate voting shares and has unanimous approval of its board. The revised share price is above the midpoint of a fair market value range of $14 to $17 as provided by TD Securities.

“The arrangement provides Dorel’s shareholders with certainty of value and immediate liquidity and is an attractive transaction relative to the status quo, particularly in light of Dorel’s continuing operational challenges,” Dorel said in a statement.

Letko, Brosseau, which manages about $19.3 billion, has been consistent in its reasons for dismissing the transaction since it was first proposed by the family and the New York-based private equity firm about three months ago.

Dorel shares plunged early last year at the start of the pandemic, but have surged as the company benefits from surging bike demand.

“We strongly believe in the long-term potential of the company and note that the family shareholders share our optimism as they plan to remain shareholders of the company,” Letko, Brosseau said.