HanesBrands acquires Pacific Brands

19 Jul '16

3 min read

HanesBrands, a global marketer of underwear, intimate apparel and activewear has acquired leading Australian brands underwear and intimate apparel company, Pacific Brands Limited.

“Pacific Brands with its iconic century-old and fast-growing Bonds brand is a great addition to our strong market-leading portfolio spanning the Americas, Europe and Asia-Pacific that is supported by a world-class company-owned global supply chain,” said Hanes Chief Operating Officer and CEO-Elect Gerald W. Evans Jr.

“We are adding a top-notch management and marketing team led by CEO David Bortolussi that will help serve as a catalyst for continued growth and value creation into the foreseeable future,” the company announced in a press release.

The acquisition of Pacific Brands adds Bonds, Australia's top brand of underwear, babywear and socks, and Berlei, the country's No. 1 sports bra brand and leading seller of premium bras in department stores to HanesBrands' global portfolio of leading innerwear brands supported by the company's global low-cost supply chain and manufacturing network.

Hanes also sells Playtex intimate apparel and Champion activewear in Australia.

It acquired the publicly traded Pacific Brands for about $800 million on an enterprise-value basis, or slightly more than 10 times projected calendar 2016 EBITDA. Annual sales for Pacific Brands' core Underwear and Sheridan divisions are nearly $600 million.

The Pacific Brands acquisition is the second that Hanes has completed in the past two weeks. The expected performance of Pacific Brands for the balance 2016 calendar fiscal year, as well as that of Champion Europe, acquired on June 30, 2016, is already reflected in the company's updated financial guidance announced on May 31, 2016.

Hanes has made six acquisitions in the past three years. The company now holds the No. 1 or No. 2 market share position for underwear, intimate apparel or hosiery in a dozen countries, including the United States, Australia, France, Japan, Canada, Germany, Italy, Mexico, Spain, Brazil, South Africa, and New Zealand.

Pacific Brands has three business units – Underwear, Sheridan, and Tontine & Dunlop Flooring. Hanes intends to divest the noncore Tontine pillow business and Dunlop Flooring business.

Based on fiscal 2016 expectations, the core Underwear and Sheridan luxury linens, towels and babywear businesses had a combined two-year compound annual sales growth rate of approximately 8%.

Pacific Brands sells wholesale to retailers and operates approximately 325 Bonds and Sheridan retail stores and retailer shop-in-shops. Bonds sales have increased 40% since 2013.

The acquisition is expected to result in significant savings through the use of Hanes' large-scale, low-cost global supply chain. Pacific Brands sources a significant majority of its underwear and intimate apparel production from third-party manufacturers, while Hanes relies primarily on company-owned manufacturing. The acquisition also adds to Hanes' global product design, development and innovation capabilities that span the Americas, Europe and the Pacific Rim. (SH)

Fibre2Fashion News Desk – India

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