By  on June 15, 2007

Kellwood Co. is getting deeper into the kids' market.

The St. Louis-based manufacturer has agreed to acquire Hanna Andersson Corp., a $100 million children's wear company with headquarters in Portland, Ore. The deal is expected to close by the end of the fiscal second quarter. Kellwood will purchase Hanna Andersson for about $175 million, and the company anticipates the acquisition will be accretive in the first full year before purchase accounting.

Kellwood was represented by J.P. Morgan Securities Inc., and Hanna Andersson was represented by CIBC World Markets. The current ownership principally consists of Castanea Partners, Dorset Capital and company management.

The Hanna Andersson brand is the second children's wear company in Kellwood's portfolio. Its Gerber Childrenswear division proved strong in a tough first quarter ended May 5. Kellwood's earnings fell 19.7 percent, pushed down by softness in women's sportswear. However, earnings in the soft goods category, which includes Gerber, climbed 29 percent to $9 million from $7 million, and sales grew 5.8 percent to $83.6 million from $79.1 million.

Founded in 1983 by a Swedish mother, Gun Denhart, and her American husband, Tom, the company was named Hanna Andersson after her grandmother. The brand is known for its quality products and cheerful designs, which are sold through a catalogue, 18 freestanding stores and Web site, Sales in 2006 were about $100 million.

Robert C. Skinner Jr., Kellwood chairman, president and chief executive officer, said in a statement that this acquisition complements the company's brand portfolio and corporate strategy.

The Hanna Andersson management team will continue to be led by Philip Iosca, president and ceo.

Kellwood intends to finance the entire purchase with cash on hand, which amounted to $321 million at May 5, 2007, according to a report from Standard & Poor's Ratings Services.

"We expect this transaction to be accretive to earnings in the near term, and should help Kellwood's leverage with the additional sales and EBITDA base," the report said.

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