TEL AVIV, ISRAEL – May 2, 2012 – Delta Galil Industries, Ltd. (DELT/Tel Aviv Stock Exchange, DELTY.PK/OTCQX), the global manufacturer and marketer of branded and private label apparel products for men, women and children, has signed a definitive agreement to acquire Schiesser AG, the leading underwear manufacturer and marketer in Germany, for a purchase price of €68 million (approximately US$90 million).
The deal will expand Delta Galil’s global market reach and its leadership in intimate apparel, particularly in branded products. With the addition of Schiesser, Delta Galil will have total sales of approximately US$900 million and its branded business will grow to about 47% of sales from some 33% at present. The transaction is expected to be accretive to Delta Galil’s earnings per share beginning in 2012.
In addition to the Schiesser brands, Delta Galil will receive at closing estimated working capital of approximately €40 million (approximately US$53 million), and Schiesser’s cash on hand at closing is estimated at about €11 million (approximately US$14.6 million). Delta Galil is financing the transaction with internally generated resources including cash and equivalents.
Schiesser has the #1 brand awareness in the underwear category in Germany, and holds the top market share in the men’s segment and solid shares in the women’s and children’s segments. The company has been known for quality products since 1875 and had sales of 132 million euros (approximately US$184 million) in 2011. By category, Schiesser’s sales consist of approximately 60% Men’s, 25% Women’s and 15% Children’s. Its products are primarily sold under the Schiesser brand, as well as Schiesser-Uncover, a youth-oriented line, and Schiesser-Revival, a trendy retro collection. Retail channels include department stores, specialty stores, and increasingly company-owned retail stores. In addition to Germany, which remains the strongest economy in Europe, key markets for Schiesser brands include Belgium, Netherlands, Switzerland, Austria and Italy, and the company has targeted Russia and Eastern Europe for potential expansion. Its Schiesser-Revival brand is sold in some high fashion specialty retailers in selected US markets.
Some 75% of Schiesser’s sales are in Germany. In addition to its own retail and outlet stores, Schiesser sells to all major German department stores and about 5,000 specialty stores in Germany and other European markets. Wholesale business accounts for approximately 70% of Schiesser’s total sales, with Retail at 30%.
Isaac Dabah, CEO of Delta Galil Industries, stated, “This is an important transaction that will allow us to make solid progress against many of our strategic goals and will drive further shareholder value. It enables us to grow the branded side of Delta Galil’s business by adding the top underwear brand in Germany, with a reputation for quality established over 137 years. The combination with Schiesser also expands our global reach with a solid position in Germany – the most vibrant market in Europe – and a base for expansion in other potentially lucrative markets. Following the acquisition, about 40% of our sales will come from Europe, up from 24% now, and the potential for future growth is exciting. Our Men’s category will grow to 23% of our sales from roughly 13%. The acquired business is also well diversified across various retail segments and Schiesser’s own stores.”
“The financial benefits to Delta Galil are also very significant,” Mr. Dabah noted. “Schiesser’s core business has been consistently profitable and the combination will be accretive to Delta Galil’s earnings. Schiesser has an efficient supply chain structure and an extremely loyal and stable customer base. Schiesser’s brand portfolio and operations are a perfect fit with the business model that we have applied successfully in Israel, and we are excited about extending this model to a much larger European market. We see many opportunities to expand Schiesser through product innovation, enhanced distribution and logistics, and development of retail stores and e-commerce activities.”
Schiesser, a privately-held company headquartered in Radolfzell, Germany, will operate as a separate wholly owned business unit of Delta Galil under its existing management team. Rudolf Bündgen, CEO of Schiesser AG, commented, “Since we operate in the same industry, Delta Galil is well known to us. We have a similar product and quality philosophy. With Delta Galil, we gain a worldwide operating owner, with whom we can enter new foreign markets more consistently and who will further support us in our marketing and distribution strategy. Likewise, Delta Galil has a lot of experience in intimate apparel, activewear and shapewear, as well as socks. Under the Schiesser brand, we can envision additional product categories.”
The transaction is expected to be concluded in July 2012.
Delta Galil Industries is a global manufacturer and marketer of branded and private label apparel products for men, women and children. Since its inception in 1975, the Company has continually strived to create products that follow a body-before-fabric philosophy, placing equal emphasis on comfort, aesthetics and quality. Delta Galil develops innovative seamless apparel including bras, shapewear and socks; intimate apparel for women; extensive lines of underwear for men; babywear, activewear, sleepwear, and leisurewear. For more information, visit www.deltagalil.com.
Matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “anticipate,” “believe,” “estimate,” “may,” “intend,” “expect” and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein, and while expected, there is no guarantee that we will attain the aforementioned anticipated developmental milestones. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, product, and distributor performance, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.
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ISRAEL MEDIA CONTACT:
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