NEW YORK — Delta Apparel Inc. recently acquired substantially all of the assets of Liquid Blaino Designs Inc., which does business as Junkfood Clothing.
The undisclosed purchase price consists of $20 million of cash subject to a post-closing adjustment, a $2.5 million seller promissory note and contingent payments over a four-year period if certain targets are met.
Fred Schmitt, a banker at The Sage Group, which represented Liquid Blaino, said, "This is a good fit for both firms, as they have core competencies in the T-shirt category and there could be some sourcing synergies. The real strength of Junkfood, like many young apparel firms, is the management team. [In this case, the] owner will stay on and run the business."
The banker said potential areas for Junkfood's growth include additional licenses and new product categories.
Natalie Grof and Blaine Halvorson started the Los Angeles-based firm in 1998 through a T-shirt line with licenses such as Twister, Candy Land and My Little Pony. Sales for the 12 months ended June 30 were $27 million. Delta said in a statement that it expects the acquisition to add $33 million to $38 million in sales and 30 cents to 35 cents to its earnings per share for the fiscal year ending July 1, 2006. A source familiar with the deal said the earn-out could raise the total purchase price to the $40 million to $50 million range.
Robert Humphreys, president and chief executive officer of Delta, said in a statement, "The purchase of Junkfood keeps with our strategy of acquiring profitable apparel operations that expand our channels of distribution."
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