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Dan River has an annual turnover of about $250 million and caters to mega retailers such as JC Penny, Wal-Mart, Linen & Things and Bed, Bath and Beyond.

Ahmedabad , Dec. 27

DALMIA-owned textiles and soda ash maker GHCL Ltd has signed an agreement to acquire Dan River Inc, a leading textiles player in the US, for $17.50 million.

GHCL, through its international subsidiary, will acquire over 90 per cent of Dan River on January 2, the company Chairman, Mr Sanjay Dalmia, told Business Line from Dubai.

The acquisition of Dan River enables GHCL to enter into existing marketing arrangements to the tune of $250 million and the US-based company will be used primarily as a marketing arm.

"We plan to outsource most of the production to units in India, Pakistan and China and shut down several Dan River's production units in the US. By the end of next year, less than 20 per cent of the production will take place in the US," Mr Dalmia said.

Dan River has an annual turnover of about $250 million and caters to mega retailers such as JC Penny, Wal-Mart, Linen & Things and Bed, Bath and Beyond.

GHCL has financed the acquisition through its $70 million foreign currency convertible bonds issue that concluded earlier this year.

The company had also recently announced the acquisition of SC Bega Upsom, a soda ash manufacturer in Romania. GHCL is evaluating certain other takeover proposals both in the soda ash and textile areas of its business, Mr Dalmia said, adding that "cash is not a problem as we have got favourable response from private equity players who have offered to help us in our expansion effort."

Meanwhile, GHCL's home textile manufacturing facility at Vapi in south Gujarat is likely to go on stream in March 2006.

The facility will be used to supply products to Dan River in the US.

The spinning capacity at its existing Vapi unit is set to rise from 85,000 spindles to 1,40,000 spindles over the next two years, Mr Dalmia said.

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