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Hanesbrands to sell Champion brand to Authentic Brands in a $1.2 billion deal

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Hanesbrands has agreed to sell its global Champion business to Authentic Brands Group for $1.2 billion, with the potential to reach $1.5 billion with additional cash contingent consideration. The company expects to receive net proceeds of $900 million from the deal, which will be used to accelerate debt reduction. Hanesbrands shares rose more than 5% during Wednesday’s trading session, reflecting investor optimism about the transaction.

Champion generated around $75 million of adjusted EBITDA over the past 12 months as of the end of the first quarter of 2024. The sale of Champion will allow Hanesbrands to focus on advancing its leading innerwear brands and optimizing its supply chain, according to board chairman Bill Simon. The agreement was unanimously approved by the Hanesbrands’ board of directors, following months of consideration and discussions with potential buyers.

This decision to sell Champion comes after activist firm Barington Capital Group urged Hanesbrands to cut costs and generate cash in response to declining sales. Authentic Brands Group and WHP Global were both reportedly interested in acquiring Champion, but Hanesbrands ultimately chose to move forward with Authentic Brands Group. The sale of Champion is seen as a strategic move to strengthen Hanesbrands’ financial position and drive consistent growth in the future.

The transaction with Authentic Brands Group marks a significant step for Hanesbrands as it looks to streamline its business operations and focus on key growth areas. By divesting its global Champion business, Hanesbrands aims to enhance its competitive position in the market and improve its overall financial performance. The company’s decision to use the net proceeds from the sale to reduce debt reflects its commitment to strengthening its balance sheet and delivering value to shareholders.

Investors and analysts are optimistic about the impact of the sale on Hanesbrands’ future performance, with shares seeing a positive response in the market. The company’s strategic focus on its core brands and supply chain optimization is expected to drive long-term growth and profitability. With the sale of Champion, Hanesbrands is positioned to capitalize on new opportunities and sustain its leadership position in the innerwear market.

Overall, the sale of Champion to Authentic Brands Group represents a significant milestone for Hanesbrands as it works towards achieving its financial goals and enhancing shareholder value. The transaction is expected to bring in substantial proceeds for the company, enabling it to strengthen its financial position and pursue its growth objectives. Hanesbrands’ decision to divest its global Champion business aligns with its strategic priorities and long-term vision for sustainable growth and success in the marketplace.

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