Carter's acquires Canadian Bonnie Togs for $98 million

Carter's, the largest branded marketer in the US of infant apparel, reported Wednesday that it has acquired Toronto-based children's clothing and accessory company Bonnie Togs in a deal valued at up to $98 million, aimed to expand in international

markets.

"The acquisition of Bonnie Togs is an important component of our long-term strategy to extend the reach of our Carter's and OshKosh B'gosh brands to consumers in international markets," said chairman and CEO of Carter's, Michael D. Casey.

"We see significant potential for growth in Canada, with an opportunity to operate approximately 160 stores contributing total annual revenues of more than $200 million by 2016," he added.

Terms of the deal are as follows: $62 million will be paid in cash upon closing of the deal, with the remaining $36 million to be paid once certain earnings objectives are achieved over a four-year period, Carter's said in a statement. The acquisition is expected to add to Carter's adjusted earnings this year. The transaction will be structured as an acquisition by Carter's of all of the outstanding stock of the legal entities comprising the Bonnie Togs business. The final purchase price is subject to a working capital adjustment. The transaction is expected to close within the next 45 days.

Bonnie Togs, which operates 59 retail stores in Canada and sells products under the Carter's and OshKosh B'gosh brands - of which it owns 22 stores in Canadian soil-, among others, posted net sales of roughly $100 million for the 12 months ending in May, reflecting an increase of about 30% from the prior year. The clothing retailer has been Carter's main licensee in Canada since 2007, and is Carter's most significant international licensee, it said.

"We are very excited to join Carter's and to jointly pursue the significant growth opportunities we see ahead in Canada," said president of Bonnie Togs, Paul Rubinstein. He will become senior vice president and market leader of Canada for Carter's after the deal is finalized. The transaction is expected to close within the next two months.