This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

HanesBrands Reunites With French Lingerie Maker DBA

PARIS (The Deal) -- Clothes maker HanesBrands (HBI - Get Report) is poised to add a bit of French flair to its line-up of everyday basics after agreeing to pay an enterprise value 400 million ($546 million) for private equity-backed DBApparel, the maker of some of France's biggest mass-market underwear brands.

Hanes said Wednesday it had struck a deal with DBApparel owner Sun European Partners LLP that values the target at about 7.5 times Ebitda, a multiple it expects to fall to about 4 times Ebitda counting expected synergies.

The deal, will reunite Hanes, of Winston-Salem, N.C. with its former sister company eight years after they parted ways when Sara Lee Corp. sold DBA to Sun European and spun off Hanes into an independent public company in 2006. It will also represent Hanes' first expansion into the European underwear market, where it expects to make $875 million of net sales a year within three to four years.

"Purchasing DBApparel would represent another great acquisition for Hanes and a good use of our ample cash flow," Hanes Chairman and Chief Executive Officer Richard A. Noll said. "We will be able to reunite two great companies to create significant growth and margin-expansion opportunities."

London-based Sun European bought Sara Lee's European apparel unit for 100 million euros and agreed to as much as 100 million euros of contingent payments based on the units' performance. The PE firm had been trying to sell DBA since at least 2012, when it tapped Morgan Stanley to find a buyer. It abandoned that sale last year after offers failed to match the PE group's own valuation of about 600 million euros.

Despite the false start and the lower valuation, Sun European's acquisition of DBA has proven "a really successful investment," said the PE group's spokeswoman Ellie Fixter. She declined to say how much the investment firm made on the sale.

DBA, which is headquartered in the Parisian suburb of Rueil-Malmaison, makes men and women's undergarments under the brand names Dim, Playtex and Wonderbra. About 43% of its sales come from France, while Germany and Austria are its second largest market, with a combined 16%.

"Dim is sort of akin to the Hanes of France," Noll told a conference call to announce the sale. "This isn't about bringing Hanes to France or Dim to the U.S. It is about driving sales" of DBA's brands in Europe."

Hanes will pay for the bulk of the acquisition using about $500 million of debt, including new loans that it plans to finalize by the end of July. "That is slightly less than a full year's cash flow," CFO Rick Moss told the conference call. "We don't expect this to impact our solid DD credit rating."

The deal for DBA comes just under a year after Hanes acquired Maidenform Brands Inc. for an enterprise value of $575 million. Hanes CEO Noll said Wednesday the company would likely take a pause from dealmaking while it integrated DBA but that further acquisitions remained part of its strategy. "The constraint is always going to be that we are not taking on too much integration risk at any time," Noll said. "When we feel that is manageable we will look at opportunities."

Hanes expects the acquisition of DBA to add about 25 cents to its earnings per share over the first year after closing and as much as $1 per share within three to four years. The deal is expected to close as early as the third quarter of 2014.

Hanes took financial advice on the acquisition from JPMorgan Securities LLC. It tapped Cleary Gottlieb Steen & Hamilton LLP for legal advice. Sun European's financial adviser was Morgan Stanley. It took counsel from Kirkland & Ellis LLP.

Hanes shares traded on the pre-market at $94.72, up $6.18, or almost 7%, on their Tuesday close of $88.54. The company has a market capitalization of $8.82 billion.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
HBI $31.72 0.92%
AAPL $128.70 -0.19%
FB $78.81 -0.23%
GOOG $540.78 0.54%
TSLA $230.51 1.98%

Markets

DOW 18,070.40 +46.34 0.26%
S&P 500 2,114.49 +6.20 0.29%
NASDAQ 5,016.9290 +11.5380 0.23%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs