Gujarat Heavy Chemicals Ltd (GHCL) has acquired over 90 per cent of the US-based home textile major Dan River Inc for $17.5 million.
It has also taken over debt worth $36 million of bondholders and in addition a working capital loan of $40 million. Thus the sum total works out to approximately $93 million. The acquisition was made through GHCL? international subsidiary.
The acquisition would be funded through the recently concluded FCCB issue proceeds, while the existing debt would be refinanced, chairman GHCL Sanjay Dalmia told the Hindustan Times. The acquisition process would be completed by the first week of January 2006, he added.
GHCL was also in a dialogue with some of the private equity investors to fund the Dan River acquisition, Dalmia said. ?ventually, this company will be listed on the US bourses. However, GHCL will retain the majority stake in the company,?he added.
Dan River Inc., a chapter 11 company, already has its outsourcing arm in the major textile belts of Asia such as China and Pakistan. It is a leading player in the US textile markets with an annual turnover of $ 250 million in home textiles.
Dalmia said that the company had a sales and distribution network within the US catering to the largest retailers and was the preferred supplier to retailers like JC Penny, Linen & Things, Wal-Mart and Bed, Bath & Beyond. ?an River is well known for its own brands in the high-end segments such as ?ed In a Bag? Marquis Home Collections and also the well-known Alexander Julian, in addition to other high margin juvenile segments as well,?he added.
This acquisition enables GHCL to enter into existing marketing arrangements of $250 million even before the Indian manufacturing unit at Vapi, Gujarat commences in March 2006.
?/SPAN>This acquisition provides us with an ideal opportunity to leverage Dan River? global platform and a renowned global brand in order to make GHCL one of the dominant players in the home textile space globally,?Dalmia said.
After this acquisition and other acquisitions made in Rumania (soda ash plant), the company is expected to cross a turnover of $600 million (Rs 2,700 crore) in the next fiscal, the chairman said.
GHCL is in the process of expanding its capacity in spinning from 85,000 spindles to 1,40,000 spindles over the next 24 months. The company is in the process of completing home textile manufacturing facility at Vapi at a cost of Rs 230 crore.
