Dawson International has agreed to sell its Todd & Duncan cashmere division to one of its Chinese suppliers, Ningxia Zhongyin Cashmere Company.
Todd & Duncan, which supplies cashmere yarn to the likes of Prada, Hugo Boss and Burberry, will continue to operate from its base in Kinross in Scotland and its 200 employees will transfer to the new company, simply called Todd & Duncan.
Dawson International chief executive Andy Bartmess will perform a consultancy role for 18 months after completion of the deal which is expected to complete within 10 weeks subject to various approvals.
Bartmess said that Todd & Duncan had experienced challenging trading conditions in recent years, with increasing raw material costs and intense competition in Europe.
“Zhongyin is committed to manufacturing cashmere yarn from a Scottish manufacturing base and maintaining a Scottish workforce,” he said. “Todd & Duncan has been sourcing top quality cashmere fibre from Zhongyin for many years and has a very strong working relationship with the company. The combination with Zhongyin is expected to strengthen Todd & Duncan’s competitive position.”
In 2008 Todd & Duncan reported an operating loss of £500,000 after exceptional charges on turnover of £22.2 million last year.
Ningxia Zhongyin will buy the business for an amount based on the value of the fixed assets and the stocks of Todd & Duncan, estimated to be around £13.5m, less a discount of £5.1m.
Dawson International will liquidate the remaining net working capital of Todd & Duncan which is estimated to be approximately £5m.
Bartmess added: “The conclusion of the sale allows Dawson International to build on our remaining core group of profitable businesses and pursue our strategy to grow these businesses and to acquire additional businesses that share our strategic strengths in design, product development and supply chain management.”