Top 40 supplier Ennis (asi/52493) announced that it has agreed to a deal to divest its Alstyle Apparel (asi/34817) division. The buying group that is purchasing Ennis’ apparel division is named Alstyle Operations LLC, and the transaction is for a total of $88 million. The purchase price includes $76 million in cash to be paid at closing and an additional $12 million to be paid over a 60-month period that would cover the capital lease of equipment related to the apparel division. Ennis says it expects the deal to close by the end of April 2016.
Ultimately, Ennis said its motivation for selling Alstyle Apparel is so that it can focus on its core print-related businesses. ”Given our strategic direction to focus on the further expansion of our print segment, the apparel segment was deemed to be a non-core asset,” said Keith Walters, chairman, president and CEO of Ennis, in a statement. ”The sale of this non-core asset allows us to fully focus on our core business segment and to be able to utilize the cash from the sale of Alstyle Apparel to further expand this business segment through strategic acquisitions. In addition, given our current leverage position, the board may also consider other uses of these funds, such as paying down debt, additional share repurchases of our company stock, and the return of capital to our shareholders in the form of a one-time special dividend.”
Irshad Ahmad, Ennis’ vice president of the apparel division and its chief technology officer, has agreed to participate as part of the buying group and will be leaving the Ennis organization as a result. At press-time, no further details about the buyer or who else is involved in the buying group were available.
Ennis ranks as the sixth-largest supplier in the industry, after reporting $257 million in North American ad specialty sales for 2014. For its most recent fiscal year, which ended on February 29, 2016, Ennis reported total unaudited sales of about $569 million, an approximate decrease of 2% from the previous year. Of its total sales, the company’s apparel division accounted for about $183 million, amounting to about a third of the company’s overall revenues.