:max_bytes(150000):strip_icc()/GettyImages-1240472944-e0d5a455436a46f6ba595e33756ef22e.jpg "HanesBrands Sells Champion Label To Authentic Brands Group for $1.2 Billion")
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Key Takeaways
- HanesBrands has sold its Champion sports apparel brand to Authentic Brands Group for at least $1.2 billion.
- The deal for the Champion label eventually could be valued at as much as $1.5 billion, if certain unspecified performance thresholds are met.
- HanesBrands said the sale is part of the company’s effort to improve its financial performance.
Shares of HanesBrands (HBI) gained in intraday trading Wednesday after the clothing maker announced it was selling its Champion sports apparel label to Authentic Brands Group for at least $1.2 billion.
The manufacturer of T-shirts, socks, underwear, and other apparel said that the deal eventually could be worth $300 million more, depending on certain unspecified performance thresholds being reached.
Sale Is Part of Repositioning HanesBrands
The company said the move came following an “evaluation of a range of strategic options” for its Champion business. Chief Executive Officer (CEO) Steve Bratspies called the decision “the culmination of significant effort by our teams to position all of our brands on the optimal path for the future.”
He added that over the past three years, HanesBrands has been taking steps to return to historical gross margins, cut costs, lower debt levels, and generate consistent cash flow.
HanesBrands noted that it expects to raise a net $900 million from the sale, and plans to use the money to accelerate reduction of debt, creating “meaningful deleveraging on a net debt-to-adjusted EBITDA basis.”
Purchaser Also Owns Eddie Bauer, Reebok
Privately held Authentic Brands Group owns several brands, including Brooks Brothers, Eddie Bauer, and Reebok, and the rights to superstars such as Elvis Presley and Muhammed Ali.
The transaction is expected to close in the second half of this year.
HanesBrands shares advanced 4.6% to $5.28 as of 1:47 p.m. ET Wednesday. They have climbed more than 17% this year.