Crown Crafts buys Springs infant division
Home & Textiles Today Staff -- Home Textiles Today, November 6, 2007
Gonzales, La. – Infant and toddler products manufacturer Crown Crafts Inc. has acquired the infant and toddler product line of Springs Global US, in a $12.4 million transaction covering inventory, intellectual property and related assets and liabilities, the company said.
Crown Crafts expects the price is to be reduced pending final inventory evaluation.
The deal was made through the wholly owned subsidiary Crown Crafts Infant Products (CCIP). The company also entered into an agreement with Springs under which Springs will warehouse and distribute purchased products for six months.
“The addition of Springs’ infant and toddler product line is expected to expand the company's toddler business from $1.3 million to $17.5 million,” said E. Randall Chestnut, chairman, president and ceo. “In addition, we anticipate that the transaction will be highly accretive and that diluted earnings per share will increase by $0.19 after the first six months when the warehousing and shared services arrangements with Springs are terminated.”
Nanci Freeman, president and ceo of CCIP, said the company’s leadership position in the category will be strengthened and observed, “With the convertible crib becoming the crib of choice for new parents, the toddler bedding category continues to grow. As the crib converts to a toddler bed, the parents are very willing to invest in toddler bedding.''
Thomas O'Connor, evp of Springs, said, “The baby business has been and remains a good business. Our decision to make this agreement with Crown Crafts simply reflects our continued focus on our three core businesses: bed, bath and basic bedding.”
Crown Crafts said it expects the acquisition to contribute an annualized net sales impact of $25 million; the company expects a negative impact of about $550,000 from the warehousing and shared services.
Crown Crafts also amended its credit facility to: increase the maximum principal amount of its revolving line of credit from $22 million to $26 million, extend the term one year to July 11, 2010, and provide for a $5 million term loan due Nov.1, 2009.
With a view toward its already planned Nov. 14 report of second-quarter fiscal results, Crown Crafts gave preliminary results as well as guidance for the third quarter.
Second-quarter net income of $0.5 million was $1.1 million less than the $1.6 million net income in the same period one year ago. Sales of $17.1 million fell 18% from $20.9 million last year.
Without giving any effect to the Springs acquisition, Crown Crafts anticipates that third quarter 2008 sales will be about 4% to 6% higher than the prior-year quarter sales of $15.4 million.