Kellwood Co. makes offer for Gerber Childrenswear Inc. at 0.65 times revenue

The Deal: Kellwood Company has agreed to buy Gerber Childrenswear Inc. in a tender offer of at least $3.42 in cash plus $3.43 worth of Kellwood shares for each share of Gerber. Kellwood said that the deal still requires regulatory approval and needs at least 70% of Gerber shareholders to tender shares.

Discussion: Gerber Childrenswear makes infant and toddler clothing, including sleepwear, underwear, playwear, cloth diapers, footwear and bibs. The company sells its products under the Gerber, Baby Looney Tunes, Little Suzie's Zoo, and Curity licensed brands, and also under its own Onesies label. Gerber also owns Auburn Hosiery Mills, which makes socks for adults. The company sells mostly through retailers such as Wal-Mart, Kmart, and Toys "R" Us. Auburn Hosiery also manufactures in Ireland for sales in Europe.

Kellwood produces several lines of women's clothing, including Koret, Sag Harbor, Cricket Lane, and Wal-Mart's Kathie Lee collection. The company also produces lingerie, men's clothing, and children's clothes, as well as camping goods. Kellwood sells its products through department stores, mass retailers, specialty boutiques, and catalogs.

The acquisition of Gerber Childrenswear will give Kellwood an opportunity to expand its product offerings into the infants and toddlers market. Auburn Hosiery will be Kellwood's first venture in marketing apparel to the European community.