Welcome to Extreme Investor Network, where we bring you the latest news and insights in the world of finance. Today, we are excited to share with you the recent deal between Hanesbrands and Authentic Brands Group regarding the sale of Hanesbrands’ global Champion business.
In a transaction valued at $1.2 billion, Hanesbrands has agreed to sell its Champion business to Authentic Brands Group. This deal includes a contingent cash consideration, with the potential to reach $1.5 billion through additional cash contingent consideration of up to $300 million if certain performance thresholds are met. The net proceeds from the deal are expected to be $900 million, which Hanesbrands plans to use for debt reduction.
This move comes after months of speculation, with reports of Authentic Brands Group and WHP Global showing interest in buying Champion. Hanesbrands first announced its intention to sell Champion in late September, following pressure from activist firm Barington Capital Group to cut costs and generate cash amid declining sales.
As a result of this transaction, Hanesbrands shares surged more than 5% during Wednesday’s trading session. With Champion generating around $75 million of adjusted EBITDA over the past 12 months as of the end of the first quarter of 2024, this deal is expected to position Hanesbrands for consistent growth and cash flow generation through a focused strategy on its innerwear brands and supply chain optimization.
“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 optimizing its world-class supply chain,” said board chairman Bill Simon.
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