HGL Limited has announced that its 50% owned subsidiary company Mountcastle, a manufacturer and distributor of customised uniforms, has entered an agreement to acquire 100% of shares in LW Reid, an online wholesaler of school and sports uniforms.
The deal is priced at a maximum of $23 million over an 18 month period, with financing through a combination of bank debt and internal funds.
Established in 1922, LW Reid has grown to service 4,300 customers, approximately 30% of Australian schools and operates a digital sales and service platform equipped with robust inventory and fulfilment process.
The combined businesses will generate revenues in excess of $40 million.
HGL CEO Henrik Thorup said that the combination of the two businesses will provide a best-in-class service to customers.
"LW Reid has built a deserved reputation for quality and innovation in the school wear market.
"The acquisition brings together over 200 years of operational experience to create a market leading business in an industry that is forecast to experience stable, long-term growth.
"The two businesses are a perfect fit, and we are particularly excited about bringing together Mountcastle’s vertically integrated manufacturing with LW Reid’s digital sales platform.
"We look forward to offering highly customisable uniforms at scale, complemented by best-in-class customer service," he said.
Mountcastle CEO James Baldwin said that the acquisition comes at the ideal time as the market is continuing to expand.
"It’s a fantastic time for the school uniform industry, as sustained population growth continues to drive demand.
"This combination of two industry leaders will capitalise on an expanding sector through a full-service, vertically integrated operating model.
"We look forward to the entire LW Reid team joining Mountcastle as we enter an exciting new phase for the group," he said.
No announcement has been made in relation to any staff restructures or redundancies.
Both parties are working to have the acquisition complete in December 2019.