Casual and athletic wear specialist Delta Apparel, Inc. has signed an asset purchase agreement to acquire substantially all of the net assets of privately-held Fun-Tees, Inc., a US designer and manufacturer of custom knit t-shirts to major branded sportswear companies.

The acquisition is expected to close on or around October 2, subject to various closing conditions. The purchase price for the transaction is $20 million in cash, subject to certain post-closing adjustments.

Delta Apparel expects to integrate the Fun-Tees textile operations into its Maiden, North Carolina, facility during fiscal year 2007 and to maintain the Fun-Tees off-shore cutting, sewing and decorating facilities located in El Salvador and Campeche, Mexico.

Delta Apparel expects the acquisition to increase its activewear segment sales by approximately $70 million in sales on an annual basis.