GALEY & LORD POISED FOR MASSIVE GROWTH
GREENSBORO, N.C. — Galey & Lord is on the verge of a huge expansion, standing ready to purchase the denim and other apparel fabrics businesses of Montreal-based Dominion Textile, if a proposed tender offer for all the stock of the Canadian company is successful.
If the Galey & Lord deal goes through, it will more than double the U.S. company’s volume.
Polymer Group, through DT Acquisition, a Canadian entity set up to complete the Dominion Textile acquisition, plans to make a cash tender offer of $8.46 U.S. ($11.75 Canadian) per common share for all outstanding shares.
As of Sept. 30, Dominion had 41 million common shares outstanding, bringing the value of the offer to about $347 million U.S. ($482 million Canadian). Polymer proposes to purchase the 370 preferred shares outstanding for $78.85 U.S. ($109.50 Canadian) a share. Polymer already holds 14.5 percent of Dominion Textile’s common stock.
Galey & Lord said Monday that it has reached an agreement to purchase the apparel fabrics business, comprising denim and career wear, once the tender offer is completed. In a telephone interview, Arthur C. Wiener, president of Galey & Lord, declined to be more specific about what Galey & Lord plans to purchase. He said he may provide more information later in the week.
Dominion’s principal denim producer is Swift Denim, which had sales of $464 million U.S. ($644.8 million Canadian) in the year ended June 30. Sales of Galey & Lord were $411 million in the year ended Sept. 30, 1996.
Swift Denim has plants in Columbus, Ga.; Erwin, N.C., and Drummondville, Quebec. It also has a European operation with production facilities in Tunisia.
While not disclosing any of the financial terms of its deal with Polymer, Galey & Lord said that it has arranged for senior bank debt and high yield financing to complete the transaction.
Meanwhile, Dominion Textile said Monday that it had received a letter from Polymer expressing the intention of making an “unsolicited cash offer” for 100 percent of the outstanding common and preferred shares of Dominion Textile.
The Dominion statement added that on Oct. 6, a committee was formed to “assess strategic alternatives” and the committee would consider the letter received from Polymer and will report to the board.
Polymer, based in North Charleston, S.C., manufactures a broad range of nonwoven and woven polyolefin products largely for industrial and medical use. It earned $14.8 million before special items, on sales of $521.4 million in 1996. After a charge of $13.9 million for early extinguishment of debt, net earnings came to $800,000.
Galey & Lord’s primary business is in woven sportswear fabrics, such as cotton blends, for casual pants and shorts. They accounted for 57.8 percent — or $238.1 million — of the company’s sales in fiscal 1996. Corduroy was the second-largest sector, contributing 18.1 percent — or $74.3 million. Uniform fabrics amounted to 12.6 percent — or $51.8 million — and home fashion fabrics, 11.5 percent — or $47.3 million. The firm in fiscal 1996 also went into apparel manufacturing last year, acquiring production facilities in Mexico and offering customers full package deals for pants and shorts using G&L fabrics.