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To Expand in Europe Hanesbrands Inc Plans to Acquire DBApparel

Date:26-06-2014

Hanesbrands Inc, a maker of undergarments said that it would acquire DBApparel, a former sister company. This will bring back together two global lingerie brands and also give Hanesbrands entry into Europe, where it does not have significant presence.

On Wednesday, shares of Hanesbrands increased 9 percent to their life-high with share holders’ hopes of fast growth in the region, where DBApparel already has a large market share.

This deal, which values DBApparel at $545 million (400 million euros) on an enterprise basis, will bring together the Playtex and Wonderbra brands.

DBApparel sells these two brands in Europe. However, Hanesbrands holds the rights for these two lingerie brands elsewhere and has other clothing brands, such as Champion and Hanes.

Hanesbrands said that the deal is expected to bolster its adjusted operating profit by 21 percent and within three or four years of closing it will add more than $875 million in annual net sales.

Until 2006, Sara Lee Corporation owned both DBApparel and Hanesbrands, but then Sun Capital Partner Inc, a private equity firm purchased Paris-based DBApparel.

DBApparel is Hanesbrands second major purchase in a year. In July 2013, Hanesbrands purchased rival Maidenform Brand for $547 million to expand its range of lingerie for younger consumers.

Given its strong cash flow, analysts had expected Hanesbrands to make acquisitions in the second half of this year. As of March 29, the company had cash and cash equivalents of $151.1 million. To fund the DBApparel deal, Hanesbrands would use cash on hand and third-party borrowings.

Other brands of DBApparel include the DIM line of innerwear, which is sold primarily in Central and Western Europe. About half of the company's total sales are accounted from the sales of DIM. The company gets around 45 percent of its sales from France, around 15 percent from Austria/Germany, and about 20 percent from Portugal, Spain and Italy, combined.

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