Gildan Activewear Inc. has entered into an agreement to purchase 100% of the capital stock of V.I. Prewett & Son, Inc. in the process announcing that it expects the acquisition to help the company achieve the high end of its EPS guidance for fiscal 2008. Prewett, located in Fort Payne, Ala., is a private label supplier of basic family socks to U.S. mass-market retailers. The initial purchase price is $125 million, with further contingent payments of up to $10 million, while Prewett has annualized sales of approximately $190 million.


The company first hinted at possible sock company acquisitions at the end of fiscal 2005, with the acquisition of Kentucky Derby Hosiery announced in June 2006. Prewett is nearly 50% larger than Kentucky Derby when it was acquired. Gildan said it will pay for the company in cash that will be financed through the GIL’s revolving bank credit facilities. The acquisition of Prewett, which is subject to U.S. regulatory approvals, is expected to close near the end of October 2007, shortly after the start of the company’s fiscal 2008.


The acquisition is expected to be accretive to Gildan's earning per share in fiscal 2008, and to increase annual EPS by approximately 20 cents per share after the acquisition integration is complete. Based on the projected first year accretion from the Prewett acquisition, and a $7 million capacity expansion of Gildan's first Honduran sock facility, Gildan now expects to achieve or exceed the high end of its previous earnings guidance range for fiscal 2008 of $1.80 to $1.85 per share.