Hanesbrands has announced the sale of its global Champion business to Authentic Brands Group (ABG) in a transaction valued at $1.2 billion, including contingent cash consideration. The deal could reach up to $1.5 billion if certain performance thresholds are met, according to a press release from Hanesbrands.
The company anticipates net proceeds of $900 million from the transaction, which will be used to expedite debt reduction. The announcement led to a more than 5% increase in Hanesbrands’ shares during Wednesday’s trading session.
As of the first quarter of 2024, Champion generated approximately $75 million in adjusted EBITDA over the previous 12 months. Bill Simon, chairman of the board at Hanesbrands, expressed confidence in the deal’s potential benefits. “We believe this transaction will enable the company to accelerate its debt reduction while positioning Hanesbrands 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,” Simon stated.
The Hanesbrands board of directors approved the agreement unanimously. This decision follows months of strategic consideration, as the company announced in late September that it was contemplating the sale of Champion. This announcement came shortly after activist firm Barington Capital Group urged Hanesbrands to cut costs and generate cash in response to declining sales.
In November 2023, reports indicated that both Authentic Brands Group and WHP Global, another brand management firm, were interested in acquiring Champion. The finalized agreement with ABG underscores Hanesbrands’ commitment to streamlining its operations and focusing on its core innerwear brands.
The sale of Champion represents a significant shift for Hanesbrands as it aims to strengthen its financial position and enhance its long-term growth prospects. By leveraging the proceeds from this transaction, the company intends to reduce its debt and optimize its supply chain, positioning itself for sustained success in the competitive apparel market.
With this strategic move, Hanesbrands is poised to enhance its financial stability and focus on its core competencies, ensuring a robust platform for future growth and innovation. The sale of Champion to Authentic Brands Group marks a pivotal moment in Hanesbrands’ journey toward financial resilience and operational excellence.
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