Delta Galil buys Schiesser for EUR68 million

Israeli apparel manufacturer and marketer Delta Galil has just announced its acquisition of German underwear label Schiesser AG, for a purchase price of EUR68 million (approximately USD90 million). Combined businesses will reach net sales

of around USD900 Million.

Therefore, the German underwear maker Schiesser has cancelled its stock market flotation and will instead be sold to Israel-based peer Delta Galil. Schiesser - which emerged from insolvency in 2010 - had originally planned to list in Frankfurt last year but postponed the plans due to stock market volatility, reminded Reuters. "Schiesser would have been a promising stock, but the volatile market environment would have offered less advantages than (the sale to) long-term oriented investor Delta Galil," Schiesser supervisory board head Volker Grub said in a statement on Wednesday.

The deal will expand Delta Galil's global market reach and strengthen its presence within the underwear its leadership in intimate apparel, particularly in branded products. With the addition of Schiesser, Delta Galil will have total sales of approximately USD900 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.

As per the official communication, in addition to the Schiesser brands, Delta Galil will receive at closing estimated working capital of approximately EUR40 million (approximately USD53 million), and Schiesser's cash on hand at closing is estimated at about EUR11 million (approximately US$14.6 million). Delta Galil is financing the transaction with internally generated resources including cash and equivalents.

Delta-Galil Industries Ltd. (DELT) surged the most in more than a year after the manufacturer of intimate apparel signed an accord to buy Schiesser Group AG for 68 million euros and saw its shares advanced 6%, the most since February last year, to 32.62 shekels at 10.22 a.m. in Tel Aviv, giving the company a market value of 767 million shekels (USD202 million).