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Unifi To Acquire Dillon Yarn Division

Unifi Inc., Greensboro, N.C., has agreed to acquire the assets of the Dillon, S.C.-based Dillon Yarn Division of Dillon Yarn Corp. for approximately $65 million. The transaction is expected to close in early January 2007.

The division, which comprises Dillon Yarns textured yarn business, produced approximately 90 million pounds of textured polyester and nylon yarn, with sales totaling approximately $130 million, in 2005. Unifi, which annually supplies raw material worth some $40 million to Dillon, will treat this material as intercompany sales following the acquisition.

Unifi expects to reduce overall production costs through operational synergies, with fiscal year 2008 synergies ranging between $6 million and $8 million. The company plans to continue operating the Dillon plant, while simultaneously streamlining the product mix with its existing manufacturing facilities.

"We compete in a global market, of which [Unifi is] a small part, and this acquisition will help us compete against imports and [respond to] other global competition," said Brian Parke, Unifi's chairman and CEO, Unifi, commenting on the value of the Dillon acquisition during a conference call following thee announcement.

Bill Lowe, Unifi's CFO and COO, described Dillon as a "mini-Unifi" in its product mix, with the exception that Unifi offers various premium value-added products not available from Dillon. He also noted the Dillon facility, which he said operates at a capacity rate in the low-90s percentile range, is able to produce short runs for customers, and Unifi will continue to offer these short runs.


November/December 2006



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