Gildan Activewear, Montreal, Quebec, announced yesterday that it had signed a definitive agreement to acquire 100 percent of the equity interest in Alstyle Apparel and its subsidiaries, which constitute the apparel division of Midlothian, Texas-based Ennis Inc., for a total cash purchase price of $110 million.
Alstyle Apparel manufactures and markets activewear products, such as T-shirts and fleece, the majority of which are sold under the Alstyle Apparel brand. Alstyle Apparel sells its products to screenprinters, embellishers and mass-marketers largely in the U.S., as well as in Canada and Mexico. Its manufacturing and distribution operations include a large-scale textile manufacturing facility, and cut and sew facilities in Mexico, as well as distribution centers in the U.S., Canada and Mexico.
The acquisition of Alstyle Apparel immediately expands Gildan Activewear’s penetration in print wear markets in the U.S., Canada and Mexico, and broadens and complements Gildan Activewear’s position in the Western U.S., where Alstyle Apparel has a strong presence.
The acquisition also will allow Gildan Activewear to enhance its competitive positioning in the Mexican print wear and retail markets. Further, manufacturing operations in Mexcio will allow Gildan Activewear to take advantage of preferential trade agreements, which provide duty-free access to markets in South America.
Alstyle Apparel’s operations will be integrated into Gildan Activewear’s print wear business. The acquisition will allow Gildan Activewear to capitalize on significant synergies through the alignment of production operations at Alstyle Apparel’s manufacturing facilities in Mexico with Gildan Activewear’s standardized manufacturing processes. In addition, through the optimization of capacity, the acquisition provides additional textile manufacturing capabilities to support further sales growth.
Gildan Activewear also expects to benefit from enhanced purchasing leverage on raw material and other input costs and logistics efficiencies.
Alstyle Apparel generated sales revenues of $183 million in earnings before interest, taxes, depreciation and amortization of approximately $19 million for its fiscal year ended Feb. 29, 2016. While the acquisition is expected to be slightly accretive to earnings per share in 2016, strong integration synergies are expected to flow through from this transaction in 2017 and 2018.
The acquisition is subject to regulatory and customary closing conditions, and is expected to close before the end of June 2016.
For more information on Gildan Activewear, visit www.gildan.com.
