Ennis Inc. Accepts $110 Million Superior Offer from Gildan Activewear for Its Apparel Division
Ennis Inc. has sold apparel division Alstyle Apparel LLC and its subsidiaries. In a bit of a twist, the Midlothian, Texas-based company has accepted a better offer from Montreal-based Gildan Activewear, and has terminated its previously announced sale agreement with another buyer.
According to a press release from Ennis Inc., the company and Gildan Activewear have entered into a unit purchase agreement under which Gildan will acquire the apparel division for a total cash purchase price of $110 million.
The closing of the transaction is expected to occur by the end of Ennis Inc.’s second fiscal quarter, at which time the company will provide transition assistance to Gildan Activewear for certain administrative, financial, human resource and information technology matters, and will sublease from Gildan a portion of a certain property located in Anaheim, Calif., that is leased by Alstyle Apparel LLC, the press release stated.
The acquisition of Alstyle Apparel 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.
Prior to Gildan Activewear’s offer, Ennis Inc. had entered into a unit purchase agreement with Alstyle Operations LLC, which had agreed to purchase the apparel division for an aggregate purchase price of $88 million ($76 million in cash to be paid at closing, subject to working capital adjustment, and the remaining balance to be paid pursuant to a capital lease covering certain equipment used by the apparel division that was to have been retained by Ennis Inc.).
Keith Walters, Ennis Inc.’s CEO and chairman of the board, released the following statement:
Given the higher purchase price offered by Gildan and the fact that the entire purchase price is payable in cash at the closing of the Gildan transaction, we believe that the sale of the apparel division to Gildan represents a superior offer for the company and our stockholders. As previously noted, given our strategic direction to focus on the further expansion of our print segment, the apparel segment was deemed to be a non-core asset. The sale of this non-core asset allows us to fully focus on our core business segment and to be able to utilize the cash from the sale of Alstyle Apparel to further expand this business segment through strategic acquisitions, through which we have been able to continually demonstrate excellent returns to our stockholders. In addition, given our current leverage position, the Board may also consider other uses of these funds such as, paying down debt, additional share repurchases of our company stock, and the return of capital to our stockholders in the form of a one-time special dividend. We are extremely excited about what the sale of this non-core asset means to the company. It will not only further strengthen one of the strongest balance sheets in the industry, but will allow us to proceed aggressively with our strategic direction for the company.
In a letter emailed to Alstyle Apparel customers, Irshad Ahmad, vice president of the apparel division, said it was Alstyle Apparel's goal to operate in a “business as usual manner, without any noticeable changes in the foreseeable future.” He went on to say that Alstyle Apparel’s current sales, customer service and order processing would remain intact. “Gildan has a successful track record in integrating acquisitions in the past and will work hard to create a seamless customer experience for you,” he added.
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Related story: Ennis Inc. Announces Proposed Sale of Alstyle Apparel