Far West Industries Inc (CDNX: FWT) and its investment bankers, Global Securities Corporation are pleased to announce that Far West has entered into a Letter of Intent to acquire 100 per cent of the outstanding shares of Umbro Canada Inc, a closely-held private sporting goods company.

The company will issue 5,071,419 common shares, which will represent approximately 50 per cent of the fully diluted, issued and outstanding common shares of the company upon completion.

This reflects a purchase price of approximately $3m at the current share price of $0.60 per share. The acquisition will require the approval of Far West shareholders and be subject to the acceptance of the Toronto Stock Exchange.

In conjunction with this announcement, the company will initiate discussions with the Toronto Stock Exchange to address the TSE's proposed suspension of trading in its shares scheduled to take effect September 1, 2000. The company is hopeful that the Umbro acquisition will enable it to meet all necessary criteria for trading on the TSE. Far West will continue to trade on the CDNX.

"We have watched Umbro's share of the soccer market in Canada grow over a ten year period from virtually nothing to a dominant position. The opportunity to combine Umbro's proven marketing and branding prowess with our manufacturing strengths and capacity should significantly enhance shareholder value," said Alex Blodgett, director. "We see this as a tremendous opportunity for both the employees and shareholders of Far West."

Umbro International is rich in heritage and maintains a long sponsorship relationship with England's national team and Manchester United, as well as sponsoring a host of other internationally recognized clubs, teams and players. Established in 1987 as Canadian licensee for Umbro International, Umbro Canada Inc consistently ranks as one of Umbro's top licensees and currently generates approximately $13.7m in annual sales from its Delta, British Columbia location.

Stuart Watson, president of Umbro, said: "Our respective strengths will be complementary, ensuring a very strong and profitable company that will be able to substantially increase sales through the development of exciting new marketing and brand-building initiatives. By joining forces, Umbro and Far West will be able to overcome the challenges each faces operating seasonal businesses. This transaction will strategically blend two entities predominately active during different times of the year".

"An immediate focus," according to Watson, "will be to increase the production output at Far West's Vernon, B.C. manufacturing facility. Increased demand from a sustained marketing drive to promote the Far West stable of brands, together with a diversion of some of Umbro's current offshore production will further this goal.

"Simultaneous with a change at the board level in June, Far West committed to making major changes to enhance the company's performance and maximise shareholder value. Part of this plan is to target strategic acquisitions, primarily in the US, that will complement Far West's product lines, make use of its manufacturing capacity and utilise its distribution base," said Russell Ker, chairman of the board.

According to Gary Pratt, president of Far West, the acquisition of Umbro will significantly enhance the value of the company for the following reasons:

- transaction will more than double Far West revenues. Umbro Canada generates stronger operating margins on a smaller capital base;

- immediate improvement in operating performance through the amalgamation of two counter-seasonal businesses (one fall-winter, the other spring-summer). This will immediately enhance cash flow through improved use of physical and human resources in both companies;

- elimination of significant redundant expenses, estimated at approximately $400,000 annually;

- enhanced positioning of products by using Umbro's expertise in brand marketing, promotion and product design;

- opportunity to dramatically improve the use of Far West's manufacturing facility;

- ability to aggressively pursue the higher margin corporate wear market; and

- significantly enhanced distribution of product throughout North America and worldwide.

Far West's core business is the design, manufacture and distribution of high quality outerwear garments, and casual and snowboarding apparel. Concentration has historically been on products manufactured from Gore-Tex® fabric. The company both imports finished garments and manufactures products in its Vernon, B.C. facility. Sales in 1999 were $10.8m.

Based on the financial performance of both companies in 1999 and the elimination of certain redundant expenses, the acquisition of Umbro by Far West is expected to result in the company generating approximately $27m in combined sales and significant cash flow and profitability in 2001.