HanesBrands Completes Acquisition of DBApparel and Increases Full-year Earnings Guidance
HanesBrands, Winston-Salem, N.C., a leading global marketer of everyday basic apparel under world-class brands, today announced that it has completed the acquisition of DBApparel, a leading marketer of intimate apparel, hosiery and underwear in Europe, for €400 million (approximately $528 million).
Hanes, one of the largest intimate wear apparel companies in the world, will immediately begin cross-company integration planning in order to drive significant value creation and synergy potential by applying Hanes' Innovate-to-Elevate strategy in Europe and leveraging its global supply chain that primarily relies on self-owned production.
"We are delighted and proud to welcome DBA's 6,200 employees into the Hanes family, a combination that creates significant growth and margin-expansion opportunities by leveraging strong brands, leading market positions, disciplined innovation, and the best apparel supply chain in the industry," Hanes Chairman and CEO Richard A. Noll said. "DBA will immediately contribute to our financial results, and the purchase price of approximately 7.5 times EBITDA represents an excellent use of our free cash flow to generate significant shareholder value."
The acquisition of DBA from Sun Capital Partners, Inc., which closed Friday, Aug. 29, 2014, is expected to be immediately accretive to adjusted earnings in 2014 and is expected to add approximately $1.00 of adjusted EPS within three to four years. The year-end holiday season is DBA's strongest earnings period with September through December typically generating approximately a third of annual sales but approximately half of annual operating profit. Hanes expects to benefit in 2014 by only incurring one-third of a year's interest expense for financing the DBA acquisition while gaining a larger proportion of annualized profit performance during the seasonally strong holiday period.
2014 Guidance Increased
Hanes has raised its full-year earnings guidance twice previously in 2014 despite the continuation of a generally muted consumer environment. Most recently, the company raised EPS guidance in conjunction with reporting second-quarter financial results on July 23, 2014, to reflect the margin-enhancing benefits of Hanes' Innovate-to-Elevate strategy and strong efficiency performance of its self-owned global supply chain. Recent results remain consistent with those expectations.