WestPoint completes deal for Chatham blanket biz

Susan Andrews, Don Hogsett, January 15, 2001

WEST POINT, GA — Putting the finishing touches on a deal that makes it a major player in the woven blankets business, and at the same time adds about $35 million to its top line, WestPoint Stevens has completed its acquisition of the century-old Chatham Mfg. blanket and throw business from CMI Industries of Elkin, NC.

For a purchase price of $8.4 million, plus the assumption of an unspecified amount of debt, the textiles giant acquired Chatham and its manufacturing facilities in Elkin, NC in a move that completed the break-up of one of the oldest, most venerable names in the home textiles business.

Chatham traces its roots back to the turbulent period that followed the American Civil War, when two North Carolina businessmen, Alexander Chatham and Thomas Lenore Gwyn, bought a small woolen mill in 1877, calling it the Elkin Valley Woolen Mill. Only a handful of years later, in 1890, Chatham bought out his partner and gave the company his own name, christening it the Chatham Mfg. Co.

The company remained under family control until 1988, when Lucy Chatham, the last of her line to actively manage the operations, sold the company to Northern Feather, a Danish producer of down comforters and pillows, for $92.4 million, far more than the pieces of Chatham yielded in their recent sale.

But less than five years later, Chatham was sold once again after its Danish parent and managers were implicated in one of the largest financial scandals to rock Europe in the 20th century, a scandal involving embezzlement and book-cooking that ultimately resulted in the suicide of the company's chairman, Johannes Petersen, and the jailing of other managers. This time Chatham, now struggling through a bankruptcy triggered by the parent's woes, was sold to greige goods producer Clinton Mills, which then renamed itself CMI Industries.

But weighed down from the first by takeover debt, then struggling through the collapse of the greige goods market to a wave of low-cost foreign imports, CMI never really found its footing; and, losing money and deeply in debt, it was never able to come up with the cash to invest in Chatham and its plants. Anxious to raise cash, last year CMI began the bust-up of the Chatham business, starting with the company's two biggest operations. In May 2000, the company sold its upholstery business to Interface Fabrics Group for $25.6 million in cash and months later, in October, sold the automotive upholstery business to a Swedish company, Borgstena Textile North America, for another $19 million in cash. With the sales of the blanket business to WestPoint, the process is now completed.

In addition to boosting WestPoint's top line, the deal gives the major mill a comprehensive presence in blankets, adding to its already rich portfolio of Vellux products, which last year generated about $108 million in sales. Over the past several years, Chatham, under division chief Alan Kennedy, had rebuilt its eroded blanket business through a series of highly successful strategic moves that included the use of the powerful Beauty Rest license, and more recently a deal to put the Springs and Wamsutta nameplates on its blanket products. Combined, those two moves helped Chatham more than double its lagging blanket sales to roughly $28 million in 2000, making it the fifth largest blanket producer in the nation. Combining blankets with sales of cotton throws, bedspreads and mattress pads, Chatham grew its annual sales to about $35 million last year.

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