Gildan Activewear Announces Acquisition of Manufacturing Facility in Bangladesh
March 31 2010 - 8:00AM
Marketwired
Gildan Activewear Inc. (TSX: GIL) (NYSE: GIL) announced today that
it had completed the acquisition of Shahriyar Fabric Industries
Limited (Shahriyar) for a total purchase price of approximately
U.S. $15 million, including the assumption of all of Shahriyar's
indebtedness.
Shahriyar owns and operates a vertically-integrated knitting,
dying, finishing, cutting and sewing facility for the manufacture
of high-quality ring-spun T-shirts near Dhaka, Bangladesh, with
annual T-shirt production capacity of 2.2 million dozens. As a
first phase of further expansion, Gildan plans to increase the
facility's annual production capacity to 3.5 million dozens, to
support the Company's strategy to grow its international business
in Asia and Europe. Gildan's previously announced textile expansion
plans in its Central American and the Caribbean Basin manufacturing
hubs remain unchanged, including the construction of a third
state-of-the-art textile manufacturing facility in Honduras (Rio
Nance V) to support the Company's projected future sales growth in
the North American screenprint and mass retail markets. Gildan
expects that its acquisition of Shahriyar will generate a return on
investment in excess of Gildan's risk-adjusted cost of capital.
The acquisition of Shahriyar is the end-result of substantial
analysis carried out by Gildan to identify a strategic location to
begin the development over time of a potential major
vertically-integrated manufacturing hub in Asia, with an
infrastructure and geographical location to position Gildan as a
low-cost, high-quality producer to serve its target markets.
Gildan intends to utilize its operating expertise and
established manufacturing processes to further enhance the
operating efficiency of the Shahriyar facility. In addition, Gildan
is committed to ensure that its vertically-integrated manufacturing
operations in Bangladesh are operated in full compliance with the
Code of Conduct for social responsibility and leading practices for
sustainability which have been implemented throughout its existing
operations.
Profile
Gildan is a vertically-integrated marketer and manufacturer of
quality branded basic apparel. The Company is the leading supplier
of activewear for the screenprint market in the U.S. and Canada. It
is also a leading supplier to this market in Europe, and is
establishing a growing presence in Mexico and the Asia-Pacific
region. The Company sells T-shirts, sport shirts and fleece in
large quantities to wholesale distributors as undecorated "blanks",
which are subsequently decorated by screenprinters with designs and
logos. Consumers ultimately purchase the Company's products, with
the Gildan label, in venues such as sports, entertainment and
corporate events, and travel and tourism destinations. The
Company's products are also utilized for work uniforms and other
end-uses to convey individual, group and team identity. The Company
is also a leading supplier of private label and Gildan branded
socks primarily sold to mass-market retailers. In addition, Gildan
has an objective to become a significant supplier of men's and
boys' underwear and undecorated activewear products to mass-market
retailers in North America.
Forward-Looking Statements
Certain statements included in this press release constitute
"forward-looking statements" within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995 and Canadian securities
legislation and regulations, and are subject to important risks,
uncertainties and assumptions. This forward-looking information
includes, amongst others, information with respect to our
objectives and the strategies to achieve these objectives, as well
as information with respect to our beliefs, plans, expectations,
anticipations, estimates and intentions. Forward-looking statements
generally can be identified by the use of conditional or
forward-looking terminology such as "may", "will", "expect",
"intend", "estimate", "project", "assume", "anticipate", "plan",
"foresee", "believe" or "continue" or the negatives of these terms
or variations of them or similar terminology. We refer you to the
Company's filings with the Canadian securities regulatory
authorities and the U.S. Securities and Exchange Commission, as
well as the "Risks and Uncertainties" section and the risks
described under the section "Financial Risk Management" of the 2009
Annual MD&A, as subsequently updated in our first quarter 2010
interim MD&A, for a discussion of the various factors that may
affect the Company's future results. Material factors and
assumptions that were applied in drawing a conclusion or making a
forecast or projection are also set out throughout this
document.
Forward-looking information is inherently uncertain and the
results or events predicted in such forward-looking information may
differ materially from actual results or events. Material factors,
which could cause actual results or events to differ materially
from a conclusion, forecast or projection in such forward-looking
information, include, but are not limited to:
-- our ability to implement our growth strategies and plans, including
achieving market share gains, implementing cost reduction initiatives
and completing and successfully integrating acquisitions;
-- the intensity of competitive activity and our ability to compete
effectively;
-- adverse changes in general economic and financial conditions globally or
in one or more of the markets we serve;
-- our reliance on a small number of significant customers;
-- the fact that our customers do not commit contractually to minimum
quantity purchases;
-- our ability to anticipate changes in consumer preferences and trends;
-- our ability to manage inventory levels effectively in relation to
changes in customer demand;
-- fluctuations and volatility in the price of raw materials used to
manufacture our products, such as cotton and polyester fibres;
-- our dependence on key suppliers and our ability to maintain an
uninterrupted supply of raw materials;
-- the impact of climate, political, social and economic risks in the
countries in which we operate;
-- disruption to manufacturing and distribution activities due to labour
disruptions, political instability, bad weather, natural disasters and
other unforeseen adverse events;
-- changes to international trade legislation that the Company is currently
relying on in conducting its manufacturing operations or the application
of safeguards thereunder;
-- factors or circumstances that could increase our effective income tax
rate, including the outcome of any tax audits or changes to applicable
tax laws or treaties;
-- compliance with applicable environmental, health and safety laws and
regulations in the jurisdictions in which we operate;
-- our significant reliance on computerized information systems for our
business operations;
-- changes in our relationship with our employees or changes to domestic
and foreign employment laws and regulations;
-- negative publicity as a result of violation of labour laws or unethical
labour or other business practices by the Company or one of its third-
party contractors;
-- our dependence on key management and our ability to attract and retain
key personnel;
-- changes to and failure to comply with consumer product safety laws and
regulations;
-- changes in accounting policies and estimates; and
-- exposure to risks arising from financial instruments, including credit
risk, liquidity risk, foreign currency risk and interest rate risk.
These factors may cause the Company's actual performance and
financial results in future periods to differ materially from any
estimates or projections of future performance or results expressed
or implied by such forward-looking statements. Forward-looking
statements do not take into account the effect that transactions or
non-recurring or other special items announced or occurring after
the statements are made, may have on the Company's business. For
example, they do not include the effect of business dispositions,
acquisitions, other business transactions, asset write-downs or
other charges announced or occurring after forward-looking
statements are made. The financial impact of such transactions and
non-recurring and other special items can be complex and
necessarily depends on the facts particular to each of them.
We believe that the expectations represented by our
forward-looking statements are reasonable, yet there can be no
assurance that such expectations will prove to be correct. The
purpose of the forward-looking statements is to provide the reader
with a description of management's expectations regarding the
Company's fiscal 2010 financial performance and may not be
appropriate for other purposes. Furthermore, unless otherwise
stated, the forward-looking statements contained in this press
release are made as of the date of this press release, and we do
not undertake any obligation to update publicly or to revise any of
the included forward-looking statements, whether as a result of new
information, future events or otherwise unless required by
applicable legislation or regulation. The forward-looking
statements contained in this press release are expressly qualified
by this cautionary statement.
Contacts: Investor Relations Laurence G. Sellyn Executive
Vice-President Chief Financial and Administrative Officer
514-343-8805 lsellyn@gildan.com Sophie Argiriou Director Investor
Communications 514-343-8815 sargiriou@gildan.com Media Relations
Genevieve Gosselin Director Corporate Communications 514-343-8814
ggosselin@gildan.com
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