HanesBrands has entered into a definitive agreement to sell the intellectual property and certain operating assets of the company’s global Champion business.
Authentic Brands Group will acquire the business for a transaction value of $1.2 billion, with 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.
The agreement, which has been unanimously approved by the HanesBrands board of directors, is the conclusion of the company’s previously announced evaluation of a range of strategic options for the global Champion business.
Chairman Bill Simon said upon completion of the transaction, the company intends to drive down debt and focus on innerwear brands such as Hanes, Bonds, Maidenform and Bali.
"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 maximizes value for Champion and best positions HanesBrands for long-term success.
"Importantly, 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.”
CEO Steve Bratspies confirmed the transaction was the culmination of a long-term effort by the team.
"Over the past three years, we have taken necessary actions to enhance the company’s operations and financial performance – returning to historical gross margins, reducing our cost structure, lowering our 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.
"As we begin the next chapter for HanesBrands, 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, HanesBrands will provide certain transition services for Champion, including operating the business in select regions through a transition period.
On a trailing 12-month basis as of the end of the first quarter 2024, the global Champion business generated approximately $75 million of adjusted EBITDA.