HanesBrands announced Wednesday it has agreed to sell its Champion business to Authentic Brands Group for up to $1.5 billion. This move, guided by Kirkland & Ellis LLP and Jones Day, marks a significant step in HanesBrands’ strategic shift.
HanesBrands Selling Champion To Authentic For $1.5B : Deal Structure and Financial Details
The transaction is valued at $1.2 billion but could include an additional $300 million based on performance thresholds, HanesBrands said in a statement. Latham & Watkins LLP is representing Authentic in this deal. Authentic Brands Group emphasized that acquiring Champion aligns with its strategy to expand its sportswear portfolio by incorporating a pioneering brand in the field.
Strategic Review and Board Approval
In September, HanesBrands initiated a strategic review of the Champion business to explore alternatives for maximizing shareholder value. Kirkland & Ellis LLP and Jones Day also advised on this review. The agreement has been unanimously approved by HanesBrands’ board, and the company anticipates completing the transaction in the second half of 2024.
HanesBrands Selling Champion To Authentic For $1.5B : Focus on Core Business and Debt Reduction
The sale is part of HanesBrands’ ongoing effort to streamline its focus on its innerwear business and attract younger consumers. Additionally, the deal will help HanesBrands reduce its debt. “Today’s announcement is the culmination of significant effort by our teams to position all of our brands on the optimal path for the future,” said Steve Bratspies, CEO of HanesBrands, in a company statement.
Enhancing Operations and Financial Performance
Over the past three years, HanesBrands has taken actions to improve operations and financial performance, including returning to historical gross margins, reducing cost structures, lowering debt levels, and generating consistent cash flow. Bratspies highlighted that the successful completion of this transaction simplifies the business, deleverages the balance sheet, and enhances operations and financial performance.
Champion’s Legacy and Future Potential
Authentic Brands Group acknowledged Champion’s historic role in athletic wear innovation, including introducing the first hooded sweatshirt and breathable mesh fabrics. “Champion’s iconic ‘C’ logo allows for seamless collaborations with major global brands and designers, driving international appeal while maintaining its recognition,” Authentic said.
