HanesBrands, a leading worldwide marketer of underwear, intimate apparel and
activewear, announced that it has entered into a definitive agreement to acquire
Pacific Brands Limited, the leading
underwear and intimate apparel company in Australia.
The acquisition would be Hanes’ sixth in the past three years
and would add Australia and New Zealand to the list of countries where the
company holds the No. 1 or No. 2 market share position for underwear, intimate
apparel or hosiery. The countries include the United States, Canada, Mexico,
Brazil, France, Germany, Italy, Spain, and South Africa.
HanesBrands projects that under its ownership publicly traded
Pacific Brands (ASX: PBG) would have calendar 2016 net sales in its core
Underwear and Sheridan businesses of approximately AUD800 million (US$600
million) and adjusted operating profit of AUD75 million (US$56 million). The
Melbourne-based company, which has a June fiscal year end, sells primarily in
Australia with some distribution in New Zealand, the United Kingdom and Asia.
“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,” Hanes Chairman and Chief Executive Officer Richard A. Noll
said. “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’ restructuring and focus on Underwear and
Sheridan has resulted in significant sales and profit growth. Based on fiscal
2016 expectations, the core businesses have a combined two-year compound annual
sales growth rate of approximately 8 percent.
Of the core business, Underwear accounts for three-fourths of
sales and includes underwear, bras, socks, hosiery, babywear and outerwear. The
Underwear group is successfully executing growth strategies to reshape its
wholesale business, expand distribution, and increase retail and online sales.
The group operates more than 150 company retail stores and retailer
shop-in-shops.
Underwear has a three-year compound annual sales growth rate
of 7 percent. The company’s biggest Underwear brand is the fast-growing Bonds,
an iconic century-old brand that holds the No. 1 market share for men’s
underwear, women’s underwear, children’s underwear, babywear and socks, as well
as the No. 3 position in bras. In addition, the Berlei brand of premium bras
sold in department stores is No. 2 in overall bra market share and No.1 in
sports bras.
The acquisition is expected to result in significant savings
through the use of Hanes’ large-scale, low-cost global supply chain. Pacific
Brands sources the significant majority of its underwear and intimate apparel
production from third-party manufacturers, while Hanes relies primarily on
company-owned manufacturing. The acquisition also would add to Hanes’ global
product design, development and innovation capabilities that span the Americas,
Europe and the Pacific Rim.
The Sheridan business, which accounts for a quarter of the
core business, has benefited from newly combined infrastructure with the
Underwear group. Sheridan markets luxury linens, towels, bedding accessories,
and loungewear in the retail and wholesale channels and has recently launched
babywear.
In the press release it mentions that Hanes will seek to
retain the Pacific Brands’ senior management team to run the business after the
acquisition.
The definitive purchase agreement has been unanimously
approved by the boards of directors of both companies. The acquisition, which is
subject to Pacific Brands shareholder approval and other customary closing
conditions, is expected to close in the third quarter of 2016. Goldman, Sachs
& Co. is serving as exclusive financial advisor to Hanes, while Baker &
McKenzie is serving as legal counsel.
Learn more about
HanesBrands here on Apparel Search, the world’s greatest fashion website
(greatest, according to us).
Thank you for taking the time to read our fashion industry blog post. We hope that you have found this news to be informative. If you have comments or questions, please add your thoughts in the discussion area below.