MONTREAL (CP) — Gildan Activewear Inc. is paying up to US$135 million for U.S. sock maker V.I. Prewett & Son Inc. and boosting its annual profit forecast.
The major Montreal-based maker of T-shirts and other apparel said Tuesday it has reached a deal to buy Prewett, a large private-label supplier of basic family socks to U.S. mass-market retailers, based in Fort Payne, Ala.
The initial purchase price is US$125 million, plus contingent payments of up to US$10 million.
The acquisition, subject to U.S. regulatory approvals, is expected to close near the end of October. Prewett has annual sales of about US$190 million.
''The acquisition of Prewett is expected to be accretive to Gildan's earnings per share in fiscal 2008, and to increase annual EPS by approximately 20 cents US per share after the acquisition integration is complete,'' Gildan said in a release.
That's based on projected first-year gains from the Prewett acquisition, and a US$7-million capacity expansion of Gildan's first Honduran sock factory.
Gildan said it now expects to achieve or exceed the high end of its previously announced earnings guidance range for fiscal 2008 of $1.80-$1.85 US per share, an increase of more than 40 percent over fiscal 2007 projected EPS of about $1.30 before restructuring charges.