USA : Ningbo-based Youngor to buy Kellwood Smart Shirts

Kellwood Company announced that its Board of Directors has unanimously approved the sale of its Smart Shirts manufacturing operations as well as related real estate assets in two separate transactions that will bring Kellwood gross proceeds of approximately $161 million in cash in the aggregate. The Company expects to utilize the proceeds from the transactions to repurchase shares and reduce debt.
The Company announced that Youngor Group Co Ltd (Youngor Group) has agreed to acquire Kellwood's Smart Shirts business for approximately $120 million in cash. The transaction, which is subject to certain customary closing conditions including regulatory approvals, is expected to close by the end of fiscal year 2007.
Separately, the Company has sold its Smart Shirts real estate assets in Hong Kong to Bright Treasure Development Ltd. for approximately $41 million in cash.
"As part of our strategy to increase shareholder value, we continually assess our portfolio of businesses to ensure that we are focused on our strongest opportunities for sales and earnings growth," stated Robert C. Skinner, Jr., chairman, president and chief executive officer of Kellwood Company.
"Following a careful review of the Company's strategy and operations, the Board and management have concluded that Smart Shirts is not consistent with our long-term strategic plan, which includes developing better and above price point brands and reinvigorating our legacy businesses.

Eliminating capital-intensive manufacturing from our operations and enhancing the Company's focus on the development of our lifestyle brands will enable us to elevate Kellwood's position in the apparel industry. Consistent with our strategy to transform Kellwood into a brand-focused marketing enterprise, this move allows us to significantly reduce our concentration in private brand sales from 28% to 12% today."
Use of Proceeds:
Kellwood expects to use proceeds from the transactions to repurchase shares and reduce debt. The repurchase of shares would be in addition to the previously approved $50 million stock repurchase program announced in September 2007.
Kellwood expects to report a pre-tax gain on the sale of the Smart Shirts business and Hong Kong building of approximately $10 million.
Guidance:
Given today's announced sale of the Smart Shirts business, Kellwood has updated its previously issued net sales and earnings guidance to exclude Smart Shirts from ongoing operations. Other than these adjustments, guidance for the third quarter and total year from ongoing operations remains the same as previously provided on September 6, 2007.
The Smart Shirts business will be included in discontinued operations for historical and future periods. In addition, the gain on the sale of the Smart Shirts business and Hong Kong building, as well as costs associated with these transactions, will be included in discontinued operations.