Cycle, STS Form Largest T-Shirt Screen Printing Firm : Clothing: Merger will combine manufacturing operations and management expertise of the beachwear and graphics companies.

TIMES STAFF WRITER

T-shirt and beachwear manufacturer Cycle Industries Inc. said Monday that it has acquired STS Graphics of Anaheim for an undisclosed price, creating the largest T-shirt screen printing firm in the nation.

The consolidation will "bring synergies" to the two companies, combining manufacturing operations and management expertise, said Cycle spokesman Jonathan Edelstein. Together, the two companies have retail sales of more than $200 million annually and command 10% of the market.

"We now have top market share in a primary industry segment and with it, the foundation for strong future growth," Edelstein said in a statement.

Cycle plans to move its equipment and staff into STS' building in Anaheim. No layoffs are planned among management or workers in the combined work force of about 1,000 employees.

Cycle, which holds the license for the popular Hobie and Catchit label T-shirts, manufactures its own Off Shore, Lineshots and Team Gear USA labels with an eye toward the volleyball, skiing and surfing markets.

STS prints Ocean Pacific Sunwear Ltd.'s line of T-shirts, as well as images of the Teenage Mutant Ninja Turtles, the leading children's characters seen on television, comic books and video games. The firm also produces T-shirts with the Newport Blue label.

The merger is hardly a pairing of strangers. Both companies courted financial backing from a Merrill Lynch subsidiary.

Merrill Lynch Interfunding bought a large share of Cycle in 1988, and now with the consolidation of the two firms will have an interest in both.

The linkage between the two is so close that Daniel Little, who started STS Graphics 20 years ago in the garage of his parents' San Fernando Valley house, said he gave away the lucrative Hobie label to Cycle Industries about a decade ago to avoid a conflict in sales of the Ocean Pacific T-shirts his firm manufactured.

Little, who plans to remain active in the combined company's management, said his firm was instrumental in getting department stores to sell T-shirts with printed designs in their sportswear departments, rather than relegating them to shelves with underwear.

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