Clothing maker Gildan Activewear has completed the previously announced purchase of Ennis Inc's apparel division for US$110m. 

The deal, agreed earlier this month gives Montreal, Canada based Gildan a new manufacturing presence in Mexico and also broadens the clothing maker's position in the western US where Alstyle has a strong presence.

Gildan moves into Mexico with US$110m Alstyle Apparel buy

The sale of its non-core apparel segment allows Ennis Inc to focus on the production and sale of business forms and printed product supplies.

The deal will see Alstyle's operations integrated into Gildan's Printwear business and provides the clothing maker with much-needed additional textile manufacturing capabilities to support further sales growth. The company is also likely to benefit from enhanced purchasing leverage on raw material and other input costs and logistics efficiencies.

It will also expand Gildan's penetration into markets in the western US, where Alstyle has a strong presence. And on top of this, having manufacturing operations in Mexico will allow Gildan to take advantage of preferential trade agreements that provide duty-free access to markets in South America.

Gildan supply chain to drive acquisition synergies

Alstyle generated sales revenues of $183m and around US$19m in pre-tax profits in the last fiscal year. While the acquisition is expected to be slightly accretive to earnings per share in 2016, strong integration synergies are expected to flow through from this transaction in 2017 and 2018.

Gildan Activewear reports solid 13% jump in Q1 profit