Ennis To Sell Its Apparel Division, Alstyle Apparel
Supplier Ennis, Inc. (UPIC: Ennis) has announced the pending sale of its apparel division, industry supplier Alstyle Apparel and its subsidiaries, to Alstyle Operations, LLC for $88 million. The transaction is expected to close at month end.
The sale includes $76 million in cash to be paid at closing and an additional $12 million to be paid pursuant to a capital lease covering certain company-retained equipment utilized by the apparel division. As part of the transaction and following the closing, Ennis will provide transition assistance to Alstyle Operations for certain administrative, financial, human resource and information technology matters for up to 18 months and will sublease from Alstyle a portion of property in Anaheim, California, that is leased by the apparel division.
“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,” says Keith Walters, chairman, CEO and president of Ennis. “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, through which we have been able to continually demonstrate excellent returns to our shareholders.”
He adds that given the company’s current leverage position, the board may also consider other uses of these funds such as paying down debt, additional share repurchases of its company stock, and the return of capital to shareholders in the form of a one-time special dividend. “We are extremely excited about what the sale of this non-core asset means to the company. It will not only further strengthen one of the strongest balance sheets in the industry, but will allow us to proceed aggressively with our strategic direction for the company,” he says.
Irshad Ahmad, Ennis’ vice president-apparel division and chief technology officer, has agreed to continue to serve as an employee of the apparel division following the transaction close. As a result and effective immediately, Ahmad is no longer serving as an officer at Ennis as the company has transferred his employment to A and G, Inc., a subsidiary of Alstyle Apparel.