Hanesbrands Inc. (NYSE:HBI), a leading manufacturer of everyday basic apparel, announced on Wednesday that it is planning to acquire DBApparel from Sun Capital Partners, assuming consultation with European and French organizations representing DBApparel employees is completed and the usual closing conditions are satisfied.
Hanesbrands Inc. (NYSE:HBI) and DBApparel were sister companies under the ownership of Sara Lee Corporation until 2006. At that point, Sara Lee sold DBApparel to Sun Capital and Hanes was spun off into an independent public company. Reunited, the two apparel giants would create one of the largest innerwear apparel companies in the world, and enjoy the worldwide rights to the Playtex, Wonderbra and DIM brands
Statement from Hanes CEO
“Purchasing DBApparel would represent another great acquisition for Hanesbrands Inc. (NYSE:HBI) and a good use of our ample cash flow to generate significant shareholder value,” Hanes Chairman and Chief Executive Officer Richard A. Noll said in a statement today. “We will be able to reunite two great companies to create significant growth and margin-expansion opportunities. Together, we will be a nearly $6 billion company utilizing our disciplined Innovate-to-Elevate strategy and leveraging our global supply chain.”
Details on the HanesBrands – DBApparel transaction
Hanesbrands Inc. (NYSE:HBI) management believes the deal will be accretive to adjusted earnings per share within the first year, including around $0.25 of adjusted EPS excluding actions in 2015. After three to four years, the acquisition would add more than $875 million in net sales annually, as well as $125 million in net adjusted operating profit, and ballpark $1.00 in adjusted earnings excluding actions.
The offer works out to €400 million on an enterprise basis, slightly less than $550 million at current exchange rates, or nearly 7½ times DBApparel’s EBITDA. Hanes will fund the acquisition with available cash and borrowings. The post-merger multiple is anticipated to be below 4 times EBITDA. The deal could close in four to five months.
France-based DBApparel markets a variety of innerwear in 16 countries in Western and Central Europe. Almost half of total sales are in France, while Germany and Austria accounts for around 15% of sales. Southern Europe represents nearly 20% of total sales.
The firm is the largest seller of intimate apparel in France and Spain, and No. 2 in Italy. DBApparel is also No. 1 in men’s underwear in France and Spain, and No. 1 in hosiery in the Europe’s biggest markets of France and Germany.