Gildan Announces Agreement to Acquire Gold Toe Moretz for Approximately $350 Million
Gildan Activewear, Montreal, announced that it had signed a definitive agreement to acquire 100 percent of the common shares of Gold Toe Moretz Holdings Corp. for a total purchase price of approximately $350 million. Gildan Activewear will not assume any of Gold Toe Moretz's currently outstanding indebtedness.
Gold Toe Moretz is a leading supplier of high-quality branded athletic, casual and dress socks for mass-market retailers, national chains, price clubs, department stores and specialty sporting goods stores in the U.S. Gold Toe Moretz's company-owned brands include the iconic Gold Toe brand, as well as the Silver Toe, GT, Auro, PowerSox and All Pro brands. Gold Toe Moretz is also the exclusive U.S. licensee for Under Armour and New Balance branded socks. The majority of the purchase price will be represented by intangible assets, including the value of these brands.
"The acquisition of Gold Toe Moretz represents an important and exciting step in Gildan's ongoing strategic development," said Glenn J. Chamandy, president and chief executive officer of Gildan Activewear. "In addition to the introduction of leading consumer brands, the acquisition provides Gildan with enhanced brand management experience and expertise, best-in-class merchandising and strong technical innovation and design capabilities to complement Gildan's existing competitive strengths for retail. These capabilities can also be utilized to further the development of our own Gildan brand."
Gold Toe Moretz's senior management team, including John Moretz, chairman and chief innovation officer, and Steve Lineberger, president and CEO, have committed to continue their careers with Gildan Activewear.
The acquisition will more than double Gildan Activewear's current revenues from the sale of socks and will significantly expand and diversify its customer base and channels of distribution within the U.S. retail market. Revenues reported by Gold Toe Moretz for the year ended December 31, 2010 amounted to over $280 million, and adjusted earnings for the same period amounted to $48.6 million. In Gildan Activewear's Q1 earnings report in February, the company reported a $6.2 million revenue increase over the same period in the previous year, but a 9.3 percent decline in the sale of socks.