PARIS (The Deal) -- Clothes maker HanesBrands (HBI) 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.