If you’ve ever shopped for school uniforms there’s a good chance you went to 97-year-old LW Reid. Now, ASX small cap HGL (ASX:HNG) is snapping it up.

HGL is an investment company that owns several brands including Mountcastle. Mountcastle is Australia’s oldest hat-maker, and one of Australia’s oldest companies.

It began in 1835 and serves schools as well as military and fashion clients.

Even though its parent company only has a market cap of $21m according to Bloomberg, Mountcastle will pay $23m over the next 18 months for LW Reid.

LW Reid mainly serves primary public schools.

The company told shareholders the combined business will make revenues over $40m. HGL CEO Henrik Thorup told Stockhead the schoolwear market was growing.

“We believe that the schoolwear market generally, just uniforms, is a market that is worth at least $700-$800m – that’s just spending on average,” he said.

In this morning’s announcement Mountcastle CEO James Baldwin also expressed optimism about the sector.

“It’s a fantastic time for the school uniform industry as sustained population growth continues to drive demand,” he said.

“The combination of two industry leaders will capitalise on an expanding sector through a full-service vertically integrated operating model.”

HGL shares climbed 8 per cent this morning after stagnating for the past several months.

Among its other business units are health product maker Pegasus Healthcare and lighting supplier JSB Lighting.


In other ASX corporate news today:

Tap Oil (ASX:TAP) jumped over 20 per cent after announcing it was paying its maiden dividend of 2.5c per share. The company will pay right on New Years Eve and noted its cash-at-hand balance and oil production from its field in the offshore Gulf of Thailand were among the deciding factors.