Cash Transaction Values Maidenform Brands, Inc., at $575 Million, or
$23.50 per Share, a 30 Percent Premium Over the Average Closing Price of
the Past 30 Days
Maidenform’s Shapewear and Average-Figure Bra Businesses Complement
HanesBrands Portfolio of World-Class Intimate Apparel Brands
Significant Value Creation and Synergies from HanesBrands’
Innovate-to-Elevate Strategy
Transaction Expected to be Accretive Within First 12 Months and add
$0.60 of EPS Annually Within Three Years
Investor Conference Call and Webcast to be Held at 8:30 a.m. Today
WINSTON-SALEM, N.C.--(BUSINESS WIRE)--Jul. 24, 2013--
HanesBrands (NYSE: HBI), a leading marketer of everyday basic apparel
under world-class brands, today announced that it has entered into a
definitive agreement to acquire Maidenform Brands, Inc. (NYSE:MFB), for
$23.50 per share, a 30 percent premium to Maidenform’s average closing
price over the past 30 days.
The all-cash transaction is expected to be accretive to earnings per
share in the first 12 months after closing and is projected to deliver
full benefits within three years of more than $500 million in
incremental annual sales, $0.60 in EPS, $80 million of operating profit,
and $65 million of free cash flow. After the transaction closes,
HanesBrands’ pro forma projected annual revenue would be more than $5
billion.
The transaction, valued at approximately $575 million on an
enterprise-value basis, has been unanimously approved by the boards of
directors of both companies. The acquisition, which is subject to
Maidenform shareholder approval, regulatory approval and other customary
closing conditions, is expected to close in the fourth quarter of 2013.
“We look forward to adding Maidenform’s exciting brands and deep product
expertise,” Hanes Chairman and Chief Executive Officer Richard A. Noll
said. “This business is a natural fit into our core business and meets
all of our acquisition criteria. We continue to use our free cash flow
to create shareholder value, including paying quarterly cash dividends,
reducing debt, and making smart, accretive acquisitions.”
The acquisition is expected to create growth and cost savings
opportunities and increased scale to serve retailers. The acquisition
will complement Hanes’ Innovate-to-Elevate strategy, which integrates
the company’s world-class brands, low-cost supply chain and product
innovation.
Maidenform sources all of its products from third-party manufacturers,
while Hanes has company-owned global manufacturing supplemented by
third-party manufacturing. Hanes expects to leverage its low-cost supply
chain to maximize the value of Maidenform to retailers and consumers.
Maidenform has a great average-figure bra business that complements
Hanes’ full-figure bra business. Maidenform is also recognized for its
shapewear, while Hanes has an established panty business. The
combination presents long-term growth opportunities by combining the
respective strengths and capabilities of the portfolios and
cross-introducing new products.
Maidenform sells intimate apparel bras, shapewear and panties under such
brands as Maidenform, Flexees, Lilyette, Self Expressions and Sweet
Nothings, as well as Donna Karan and DKNY under license. In 2012, 57
percent of the Maidenform’s revenue was generated by bra sales and 35
percent by shapewear sales. Approximately 90 percent of sales were in
the United States.
Hanes’ intimate apparel brands include Playtex, Baliand
Just My Size, which are market leaders in the full-figure bra
category, as well as Hanes, Barely There, Wonderbra, Champion
and L’eggs, and Donna Karan and DKNY under license.
“We are looking forward to Maidenform joining the Hanes family,” Noll
said. “Maidenform has great brands that consumers trust. Combining the
complementary strengths of both companies creates a lot of growth
opportunities.”
Acquisition Funding
Hanes intends to fund the acquisition with cash on hand and short-term
borrowings on its revolving credit facility, which will be retired
through free cash flow. The company has completed an amendment to its
revolver that decreases borrowing costs by 25 basis points and increases
the borrowing limit to $1.1 billion.
Hanes continues to expect to retire the remaining $250 million of 8
percent senior notes by the end of 2013 and expects to end the year with
$1 billion in bond debt. If the acquisition closes in the fourth quarter
as planned, the company expects to end the year with a ratio of
long-term debt to EBITDA within the company’s previously disclosed
target range of 1.5 to 2.5 times.
Advisors
Goldman, Sachs & Co. is serving as exclusive financial advisor to Hanes.
King & Spalding LLP is serving as legal counsel to Hanes.
Webcast Conference Call
Hanes will host a live Internet webcast of its investor conference call
to discuss the acquisition announcement at 8:30 a.m. EDT today. The
webcast may be accessed on the investor page the Hanes corporate
website, www.HanesBrands.com.
The call is expected to conclude by 9 a.m.
An archived replay of the conference call webcast will be available in
the investors section of the Hanes corporate website. A telephone
playback will be available from approximately noon EDT today through
midnight EDTJuly 31, 2013. The replay will be available by calling
toll-free (855) 859-2056, or by toll call at (404) 537-3406. The replay
pass code is 23146604.
Note on Non-GAAP Terms and Definitions
Free cash flow and EBITDA are not generally accepted accounting
principle measures.
Free cash flow is defined as net cash from operating activities less net
capital expenditures. Free cash flow may not be representative of the
amount of residual cash flow that is available to the company for
discretionary expenditures since it may not include deductions for
mandatory debt-service requirements and other nondiscretionary
expenditures. The company believes, however, that free cash flow is a
useful measure of the cash-generating ability of the business relative
to capital expenditures and financial performance.
EBITDA is defined as earnings from continuing operations before
interest, taxes, depreciation and amortization. Although the company
does not use EBITDA to manage its business, it believes that EBITDA is
another way that investors measure financial performance.
Hanes has chosen to provide these measures to investors to enable
additional analyses of past, present and future operating performance
and as a supplemental means of evaluating company operations. Non-GAAP
information should not be considered a substitute for financial
information presented in accordance with GAAP and may be different from
non-GAAP or other pro forma measures used by other companies.
Cautionary Statement Concerning Forward-Looking Statements
This press release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. Forward-looking statements include
all statements that do not relate solely to historical or current facts,
and can generally be identified by the use of words such as “may,”
“believe,” “will,” “expect,” “project,” “estimate,” “intend,”
“anticipate,” “plan,” “continue” or similar expressions. In particular,
among others, statements about the HanesBrands acquisition of Maidenform
(the “acquisition”), including the expected impact on HanesBrands’
sales, earnings, operating profit and free cash flow, the anticipated
funding of the acquisition and the expected timing for closing the
acquisition are forward-looking statements. Forward-looking statements
inherently involve many risks and uncertainties that could cause actual
results to differ materially from those projected in these statements.
Where, in any forward-looking statement, we express an expectation or
belief as to future results or events, such expectation or belief is
based on the current plans and expectations of our management, expressed
in good faith. However, there can be no assurance that the expectation
or belief will result or will be achieved or accomplished, and actual
results may differ materially from those contemplated by the
forward-looking statements. A number of important factors could cause
actual results to differ materially from those contemplated by the
forward-looking statements, including, but not limited to our ability to
achieve expected synergies and successfully complete the integration of
Maidenform, events that could give rise to a termination of the merger
agreement or failure to receive necessary approvals or funding for the
acquisition, the outcome of any litigation related to the acquisition,
and the level of expenses and other charges related to the acquisition
and the funding thereof. For further information regarding the risks
associated with HanesBrands’ and Maidenform’s businesses, please refer
to their respective filings with the SEC and the proxy statement and
other materials that will be filed with the SEC by Maidenform in
connection with the acquisition. There can be no assurance that the
acquisition will be completed, or if it is completed, that it will close
within the anticipated time period or that the expected benefits of the
acquisition will be realized. We believe these forward-looking
statements are reasonable; however, undue reliance should not be placed
on any forward-looking statements, which are based on current
expectations. All forward-looking statements speak only as of the date
hereof. We undertake no obligation to update or revise forward-looking
statements that may be made to reflect events or circumstances that
arise after the date made or to reflect the occurrence of unanticipated
events, other than as required by law.
Additional Information and Where to Find It
In connection with the acquisition, Maidenform will file a proxy
statement and other materials with the SEC. INVESTORS AND SECURITY
HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER RELEVANT
MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT MAIDENFORM AND THE ACQUISITION. Investors and security
holders may obtain free copies of these documents (when they are
available) and other documents filed with the SEC at the SEC’s website
at www.sec.gov.
In addition, the documents filed by Maidenform with the SEC may be
obtained free of charge by contacting Maidenform’s investor relations
department by telephone at (732) 621-2300 or via email at ir@maidenform.com.
Participants in the Solicitation
Maidenform and its officers and directors and HanesBrands and its
officers and directors may be deemed to be participants in the
solicitation of proxies from Maidenform stockholders with respect to the
acquisition. Information about Maidenform’s officers and directors and
their ownership of Maidenform common shares is set forth in the proxy
statement for Maidenform’s 2013 Annual Meeting of Stockholders, which
was filed with the SEC on April 10, 2013. Information about HanesBrands’
officers and directors is set forth in the proxy statement for
HanesBrands’ 2013 Annual Meeting of Stockholders, which was filed with
the SEC on Feb. 21, 2013. Investors and security holders may obtain more
detailed information regarding the direct and indirect interests of the
participants in the solicitation of proxies in connection with the
acquisition by reading the preliminary and definitive proxy statements
regarding the acquisition, which will be filed by Maidenform with the
SEC.
HanesBrands
HanesBrands is a socially responsible leading marketer of everyday basic
apparel under some of the world’s strongest apparel brands, including Hanes,
Champion, Playtex, Bali, JMS/Just My Size, barely
there, Wonderbra and Gear for Sports. The company
sells T-shirts, bras, panties, men’s underwear, children’s underwear,
socks, hosiery, casualwear and activewear produced in the company’s
low-cost global supply chain. Ranked No. 512 on the Fortune 1000 list,
Hanes has approximately 51,500 employees in more than 25 countries and
takes pride in its strong reputation for ethical business practices.
Hanes is a U.S. Environmental Protection Agency Energy Star 2013 and
2012 Sustained Excellence Award winner and 2010 and 2011 Partner of the
Year. The company ranks No. 141 on Newsweek magazine’s list of Top 500
greenest U.S. companies. More information about the company and its
corporate social responsibility initiatives, including environmental,
social compliance and community improvement achievements, may be found
on the Hanes corporate website at www.HanesBrands.com.
Source: HanesBrands
HanesBrands
News Media:
Matt Hall, 336-519-3386
or
Analysts
and Investors:
T.C. Robillard, 336-519-2115