Jeantex Group, which designs and makes consumer products for apparel markets, has signed a letter of intent to acquire the stock of garment and packaging materials company Sanatex.

According to the letter, Jeantex will buy all issued and outstanding stock of Sanatex, after which Sanatex will be a wholly-owned subsidiary of Jeantex. The company will be led by Hassanein M Hassanein, chief executive officer of Sanatex.

The deal, which is subject to customary closing conditions, is expected to close in the fourth quarter of 2005. Jeantex expects the acquisition to be accretive to earnings in the fourth quarter.

Sanatex expects revenue growth of about USD$35m and earnings of about $3.5m for the financial year ended 31 December 2006.

Jeantex chairman Henry Fahman said: "Sanatex has been very successful as a low-cost private label manufacturer for large mass merchant and department stores such as Target, Kohl's, Sears and Wal-Mart.

"The company's success stems in part from its 238,000-square-foot manufacturing facilities in Egypt, which operates as a duty-free qualified investment zone into the US. We plan to increase our production for both Sanatex and Jeantex out of this facility."

Fahman added that Sanatex has good potential to grow its presence in existing distribution channels by working with Jeantex to enhance design capacities and goods assortment.

Jeantex makes jeans for brand names such as ABS, Blue Cult, Guess, Hurley, Limited Express, and Lucky.