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Kaltex deal will alter Revman biz

Grupo Kaltex, the Juarez, Mexico-based textiles manufacturer that last month took a majority stake in Revman Industries, will leverage its new affiliation as an entry vehicle to U.S. markets. While the acquisition should financially benefit Revman, it will also undoubtedly alter a portion of the company's mission.

"We're taking a larger position in the market," said Rafael Kalach, chairman, president and ceo of Kaltex, during an introductory meeting at Revman's showroom here last week. "In the very near future, Revman will be more important."

Kaltex will funnel all of its U.S. home textiles business through Revman — at retail and wholesale. Indeed, that potential was a primary influence in sealing the Revman deal, he said. Moreover, Revman will seek to move into some markets currently being abandoned by other companies.

Kaltex, a private company with sales of approximately $700 million, replaced the Japanese retail conglomerate Aeon Group through an all-stock transaction in early February. It has been one of Revman's suppliers for years, assuming a central role in the U.S. firm's outsourcing strategy.

"There are opportunities for growth that under the old ownership were in a holding pattern," said Rich Roman, president and ceo of Revman.

Prior to consummating the deal with Revman, Kalach said he was approached by a number of other U.S. firms seeking acquisition of their bricks-and-mortar manufacturing operations. However, Kalach said the Revman operating model was consistent with his approach to the U.S. market and more "reasonable." He said he'd like to find a similar alliance for Kaltex's apparel business.

Kalach said he would also like to see the creation of a private label division at Revman.

He also said Kaltex will develop a plan to represent Revman's existing licenses in Mexico. Those currently include Tommy Hilfiger, Laura Ashley, P.O.S.H., Echo, Marimekko, Kravat and Nicole Miller. Rich Roman, president and ceo of Revman, said many of the agreements to permit that are already in place.

Kalach and Roman emphasized that Kaltex's ownership does not obligate Revman to exclusively purchase its fabrics from Kaltex.

"We'll continue to source product from all over. We'll continue to do business with Kaltex and others as time goes on," Roman said, pointing out that Kaltex is also a supplier for some of Revman's competitors.

Roman said that a major advantage of working with a Mexico-based company is its proximity to the United States. Turnaround time for a new order with Kaltex, he estimated would take between 19 and 27 days. Due to current security issues, a new order with an overseas company takes approximately 22 weeks.

The strength of the alliance, too, should position both companies to better compete against a flood of Chinese imports when trade quotas are removed in 2005.

To compete, Kalach said, all companies will need to develop a carefully defined niche. He made it clear that future survival in the home textiles business will hinge on the ability of firms to go well beyond basic goods.

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