Gildan Activewear to add Kentucky Derby Hosiery Co Inc in portfolio
20 Jun '06
3 min read
Apparel retailer Gildan Gildan Activewear Inc announced that it has entered into an agreement to purchase 100% of the equity of Kentucky Derby Hosiery Co Inc, a US hosiery manufacturer based in Hopkinsville, Kentucky.
The total purchase price, including the assumption of all of Kentucky Derby's debt, is approximately U.S. $45 million. Consideration for the equity component of the purchase price will be paid in cash on closing, with the exception of approximately U.S. $0.5 million, which will be satisfied by Gildan shares, subject to regulatory approval. The acquisition is expected to close on or around July 3, 2006, the beginning of the fourth quarter of Gildan's fiscal year.
Kentucky Derby has annual sales in excess of U.S. $130 million, primarily consisting of private label programs for U.S. mass-market retailers. Based on Kentucky Derby's current level of profitability, the acquisition will initially be neither accretive nor dilutive to Gildan's earnings.
However, once the integration of Kentucky Derby is complete, Gildan currently expects the acquisition to enhance annual E.P.S. by approximately U.S. $0.30. Gildan plans to undertake the integration process during fiscal 2007 and 2008.
Gildan intends to utilize Kentucky Derby's experience and distribution with mass-market retailers to enhance its platform to build the Gildan brand in hosiery, underwear and activewear, while continuing to provide quality products to support and develop Kentucky Derby's private label programs and brand licences.
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