As first reported in a Breaking News post on Wednesday, Gildan Activewear (asi/56842) has signed a definitive agreement to acquire a 100% equity interest in Alstyle Apparel (asi/34817). Gildan will pay $110 million in cash to purchase the apparel company. Alstyle was formerly a division of Top 40 supplier Ennis (asi/52493), but the company announced last month that it agreed to divest the apparel division and focus on its core business. The deal with Gildan is expected to close by the end of June.
In a statement, Gildan said the acquisition will “complement Gildan’s position in the Western United States where Alstyle has a strong presence.” In addition, the supplier believes it will improve its position in the Mexican printwear and retail markets, gain additional leverage on raw material purchases and provide Gildan duty-free access to South American markets due to preferential trade agreements through Alstyle’s Mexican manufacturing operations.
Alstyle’s operations will be integrated into Gildan’s Printwear business, and provide additional manufacturing capabilities for Gildan. Alstyle also has distribution centers in Mexico, Canada and the U.S. This is Gildan’s second major move into the decorated apparel business, after it acquired Anvil Knitwear (asi/36350) in 2012.
At the beginning of April, Ennis agreed to sell Alstyle to a buying group named Alstyle Operations LLC for $88 million. Ennis said at the time that it expected to close that deal by the end of April. Alstyle generated $183 million in sales revenue and EBITDA of approximately $19 million last year.
Separate from its Alstyle acquisition, Gildan also released an earnings statement yesterday in which it reported that sales for the first quarter of its fiscal year were $593.3 million, down 6.7% from $636.2 million in the same time period last year. Meanwhile, the company reported income was $69 million for the first quarter of 2016, or $0.28 per share. Earnings reported in the previous quarter were $57.5 million, or $0.24 a share, an increase of 20%. The company reported double-digit growth in the fourth quarter of 2015 when compared to the same quarter in 2014.