Orange 21 to acquire Italian sunglasses maker LEM S.r.l.
25 Oct '05
2 min read
Leading brands developer Orange 21 Inc announced it has elected to exercise its option to purchase its Italian manufacturer, LEM S.r.l., subject to certain closing requirements. The transaction is expected to close in December 2005, at which time it is anticipated that LEM will become a wholly owned subsidiary of Orange 21 Inc.
LEM, founded in 1984, is one of the world's premier manufacturers of premium sunglasses and goggles. Located in Northern Italy, LEM currently manufactures approximately 79% of Orange 21's eyewear products through September 2005.
This represented approximately 70% of LEM's revenue of EUR 11.2 million for the fiscal year ending June 30, 2005. Riccardo Polinelli, who founded LEM, will remain with Orange 21 as the General Manager of the LEM subsidiary.
Orange 21's Chief Executive Officer, Barry Buchholtz informed that they are pleased to announce the acquisition of LEM, and to bring the majority of their sunglass and goggle manufacturing in-house. LEM has been instrumental in allowing Orange 21 to develop and manufacture premium eyewear products.
Company believes this acquisition will allow us to shorten manufacturing lead times, accelerate their product to market process, and improve product gross margins. Additionally, this vertical integration will minimize the historical risk of supply chain interruption and product quality issues.
Under the terms of the agreement, Orange 21 will pay EUR 3.3 million euroin cash plus a two year earn out in exchange for the outstanding LEM stock. The Company projects that the transaction will be slightly dilutive for the stub period in 2005 and in 2006. The transaction is expected to be accretive in 2007 and beyond.
Orange 21 develops brands that produce premium products for the action sport and youth lifestyle markets. Orange 21's brands include Spy Optic, which manufactures sunglasses and goggles targeted towards the action sports and youth lifestyle market, and E Eyewear, which manufactures the signature Dale Earnhardt, Jr. sunglass line.
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