Gildan Activewear Inc. has inked a deal to acquire 100 percent of the common shares of GoldToeMoretz Holdings Corp. for $350 million.
As part of the purchase agreement, Gildan will not assume any of GoldToe’s outstanding indebtedness, Gildan said. The transaction is expected to close shortly, and Gildan said the purchase will be financed out of its cash balances and utilization of its revolving bank credit facility.
Blackstone Group purchased GoldToe in 2006. Market sources said GoldToe had been hurt by rising cotton prices and had recently sought waivers on terms of its loan covenants.
The Montreal-based activewear firm also said GoldToe’s senior management — John Moretz, chairman and chief innovation officer, and Steve Lineberger, president and chief executive officer — will continue in their roles at GoldToe.
The acquisition includes the GoldToe, SilverToe, GT, Auro, PowerSox and All Pro brands. GoldToe is also the exclusive U.S. licensee for Under Armour and New Balance branded socks.
Gildan said the acquisition will “more than double” its current revenues from the sale of socks, as well as “significantly expand and diversify its customer base and channels of distribution within the U.S. retail market.”
For the year ended Dec. 31, 2010, GoldToe said revenues were more than $280 million, and adjusted EBITDA was $48.6 million.
Gildan said it expects to achieve between $10 million and $15 million of annualized cost synergies, which would be realized over the next 24 months.
Gildan said it will update its financial outlook for fiscal 2011, including the impact from the GoldToe deal, when it reports second-quarter results on May 11.