HanesBrands sells Champion to Authentic Brands Group for $1.2 billion

HanesBrands announced on Wednesday that it would sell its global Champion business to Authentic Brands Group in a transaction valued at US$1.2 billion, including contingent cash consideration. This move aligns with HanesBrands' strategy to streamline its business and focus on innerwear categories. The company's shares surged more than 5% during Wednesday’s trading session following the announcement.

Transaction snapshot

  • Deal value: US$1.2 billion, potentially up to US$1.5 billion
  • Deal multiples: 0.6 – 0.7x revenue; 16 – 20x EBITDA
  • Deal type: Acquisition
  • Investors: Authentic Brands Group

The deal could reach up to $1.5 billion through an additional contingent cash consideration of up to $300 million based on performance thresholds. Champion, known for its athletic tops and hoodies, will help Authentic Brands enter the fast-growing sportswear market, catering to customers seeking comfortable and stylish casual and athleisure clothing.

Authentic Brands owns a variety of clothing brands, including Aeropostale, Eddie Bauer, Forever 21, and Ted Baker. HanesBrands plans to focus on expanding its innerwear category and increasing investments across its brands, including Hanes, Bonds, Maidenform, and Bali.

As of the end of the first quarter of 2024, Champion generated around $2 billion in revenue and $75 million of adjusted EBITDA over the past 12 months. HanesBrands expects net proceeds of $900 million from the transaction, which it plans to use to accelerate debt reduction.

“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 optimising its world-class supply chain,” said board chairman Bill Simon.

The HanesBrands board of directors approved the agreement unanimously. The decision comes months after the company first announced in late September that it was considering selling Champion, just over one month after activist firm Barington Capital Group began pressuring HanesBrands to cut costs and generate cash amid declining sales. In November 2023, CNBC reported that Authentic Brands Group and fellow brand management firm WHP Global were both interested in buying Champion.

The deal is expected to close in the second half of 2024. After the deal closes, HanesBrands will provide certain transition services for Champion, including operating the business in select regions.

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