Sherwood in bosom of Italian bra family
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Your support makes all the difference.SHERWOOD Group, the lace and underwear maker, is spending pounds 19.6m on a 75 per cent stake in Lepel, an Italian family-owned bra company.
The company placed shares among institutions to settle the pounds 10.3m first instalment. The remaining pounds 9.3m, due to be paid in 12 months, will come from profits that are expected to flow by then from the new and existing businesses.
The acquisition was disclosed alongside a 17 per cent increase in pre- tax profits to pounds 16.9m last year compared with pounds 14.5m.
Sherwood is the second largest bra maker in the UK while Lepel is the third largest player in the Italian market with a 10 per cent share.
The total acquisition cost is 7.5 times Lepel's post-tax profits for 1992 - comparatively cheap for a successful and efficient business. However, the chairman, David Parker, said the Leporati family, who would retain 25 per cent and continue to run the business, wanted 'to get into bed with someone they could relate to'.
There is little room for Sherwood to cut costs at its new acquisition. Lepel is geared to the production of B cup brassieres which is apparently the most popular size in Italy. Sherwood's UK manufacturing has to satisfy a much wider size range. Mr Parker said there would be opportunities to cross-sell, however.
The placing price was 145p while Sherwood's shares fell 3p to 154p yesterday. The dividend is 2.6p, up 13 per cent.
Dewhirst, which depends on Marks & Spencer to sell 80 per cent of the men's, women's and children's wear it makes, boosted taxable profits 56 per cent to pounds 6.4m for the year to 15 January. The dividend is 39 per cent higher at 1p.
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