An Active wear giant Hanes brand has agreed a $1.2 billion deal to sell the intellectual property and certain operating assets of its global Champion business to Authentic Brands Group. The deal has the potential to reach up to $1.5 billion through an additional contingent cash consideration of up to $300 million based on achievement of performance thresholds.
Hanes Brands says it has made significant progress in recent years to reignite its innerwear business, increase market share, attract younger consumers, and strengthen its operating model. Upon completion of the sale, the company says it intends to focus on extending its leadership position in the innerwear category and generating above-market growth through “continued consumer-centric product innovation and increased investment” across its portfolio of leading brands, including Hanes, Bonds, Maidenform, and Bali.
Announcing the deal, Bill Simon, chairman of the board, said, “Following a thorough review of options for the global Champion business with the support of our financial and legal advisors, we are pleased to have reached this agreement with Authentic Brands Group that we believe maximises value for Champion and best positions Hanes Brands for long-term success.
“Importantly, we believe this transaction will enable the company to accelerate its debt reduction while positioning Hanes Brands to deliver consistent growth and cash flow generation through a focused strategy on advancing its leading innerwear brands and optimizing its world-class supply chain.”
Steve Bratspies, CEO said that over the past three years, Hanes Brands had taken necessary actions to enhance its operations and financial performance – returning to historical gross margins, reducing its cost structure, lowering debt levels, and generating consistent cash flow.
“The successful completion of this transaction further simplifies our business, deleverages our balance sheet and enhances the company’s operations and financial performance,” he said. “As we begin the next chapter for Hanes Brands, we believe we’re in an even stronger position to further extend our leadership in innerwear, pursue new cost reduction opportunities as we ensure we have the right operating structure in place, and advance our multi-year flywheel to drive strong shareholder returns.”
The transaction remains subject to customary closing conditions and is expected to be completed in the second half of 2024. Subsequent to the closing, Hanes Brands will provide certain transition services for Champion, including operating the business in select regions through a transition period.
Hanes Brands say it expects net proceeds from the transaction of approximately $900 million. It intends to classify Champion as discontinued operations in the second quarter of 2024 and as a result, expects to update its full-year 2024 guidance in conjunction with the release of its second-quarter earnings results.
Headquartered in New York, Authentic is a brand management and licencing company. Generating more than $29 billion in global annual retail sales, its brands have an expansive retail footprint in 150 countries, including 13,000-plus freestanding stores and shop-in-shops and 400,000 points of sale.
Authentic’s portfolio includes Shaquille O’Neal, Reebok, Brooks Brothers, Barneys New York, Ted Baker, Nautica, Juicy Couture and Eddie Bauer.
