HanesBrands to Acquire Pacific Brands for $800M Cash

In What's New, Industry News by Lauren Parker

Hanes Silk Reflections

Hanes Silk Reflections

HanesBrands, marketer of hosiery, underwear, intimate apparel and activewear, has agreed to acquire Pacific Brands Limited, the leading underwear and intimate apparel company in Australia.

Hanes holds the No. 1 or No. 2 market share for underwear, intimate apparel of hosiery in the United States, Canada, Mexico, Brazil, France, Germany, Italy, Spain, and South Africa. This acquisition–Hanes’ sixth in the past three years–will add Australia and New Zealand to this list.

HanesBrands projects that under its ownership the publicly traded Pacific Brands (ASX: PBG) will have calendar 2016 net sales in its core Underwear and Sheridan businesses of approximately US$600 million and adjusted operating profit of US$56 million. The Melbourne-based company, sells primarily in Australia with some distribution in New Zealand, the United Kingdom and Asia.

The all-cash transaction, valued at approximately US$800 million, is projected to deliver full benefits within three years, attaining adjusted operating profit of approximately US$100 million, contributing approximately US$0.25 to Hanes’ adjusted EPS.

“Pacific Brands is a natural addition to the HanesBrands portfolio with its strong market-leading brands that will be complemented by our global supply chain,” said Hanes Chairman and Chief Executive Officer Richard A. Noll. “In the span of 10 years, we have transformed the company through acquisitions and our Innovate-to-Elevate initiatives. We have tripled operating profits and expanded from a $4 billion company concentrated in the United States to a $7 billion global underwear and activewear powerhouse spanning the Americas, Europe and Asia-Pacific. This foundation will serve as a catalyst for even further growth and value creation for the foreseeable future.”

Pacific Brands has three business units – Underwear, Sheridan, and Tontine & Dunlop. The company has undergone significant restructuring over the past two years to streamline its portfolio to focus on the core Underwear and Sheridan businesses.

“Pacific Brands, led by a top-notch management and marketing team, will make a significant addition to our worldwide portfolio of leading brands,” said Hanes Chief Operating Officer Gerald W. Evans Jr. “We believe we can make meaningful contributions to the continued execution of the Pacific Brands growth strategy and support it with our world-class low-cost supply chain. This will also add geographic scale that will benefit our existing Champion Australia business.”

Hanes will seek to retain the Pacific Brands’ senior management team to run the business after the acquisition.

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