Hanesbrands, a global leader in iconic apparel brands, has announced the sale of its global Champion business to Authentic Brands Group for a transaction value of $1.2 billion, with the potential to reach up to $1.5 billion. The sale is part of the company's increased focus on its global innerwear business and accelerated debt paydown to deliver enhanced value for shareholders.
The company expects net proceeds from the transaction of approximately $900 million, including working capital adjustments and other customary transaction costs, and excluding the contingent cash consideration. It plans to utilize all net proceeds from the transaction to accelerate its reduction of debt and expects meaningful deleveraging on a net debt-to-adjusted EBITDA basis.
On a trailing 12-month basis as of the end of the first quarter of 2024, the global Champion business generated approximately $75 million of adjusted EBITDA, which is net of approximately $60 million of stranded costs. The company has specific plans to remove all stranded costs within a year of the transaction closing as it completes the transition of the business.
Following the sale, Hanesbrands 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.
The transaction is expected to be completed in the second half of 2024, and subsequent to the closing, Hanesbrands will provide certain transition services for Champion, including operating the business in select regions through a transition period. The company expects to classify Champion as discontinued operations in the second quarter of 2024 and update its full-year 2024 guidance in conjunction with the release of its second-quarter earnings results.
Goldman Sachs & Co. LLC and Evercore are serving as financial advisors to Hanesbrands, and Kirkland & Ellis LLP and Jones Day are serving as its legal advisors. Following these announcements, the company's shares moved -2.7%, and are now trading at a price of $5.16. For the full picture, make sure to review Hanesbrands's 8-K report.
