Acquisition Advances Delta Galil’s Branded Strategy and Global
Diversification
Combined Businesses Have Net Sales of Approximately US$900 Million,
Transaction Expected to be Accretive to Delta Galil’s Earnings in 2012
TEL AVIV, Israel--(BUSINESS WIRE)--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 financial benefits to Delta Galil are also very significant”
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
(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%.
A Strategic and Financial “Win”
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.
About Delta Galil Industries
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.
Safe Harbor Statement
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.
Contacts
U.S. Media:
Berns Communications Group
Stacy
Berns/Jessica Liddell
212-994-4660
sberns@bcg-pr.com
or
Israel
Media:
UNIK
Nissim Duek
Meital Levi Tal
054-7739677
meitall@unik.co.il