– Leading Branded Intimate Apparel and Underwear Company Meets Hanes’
Acquisition Criteria for Value Creation and Growth Opportunities
– With Powerhouse Brands, Including DIM, DBApparel Primarily Holds
the No. 1 Market Share Positions in France, Germany, Spain and Italy
– Significant Value Creation and Synergy Potential from Grafting
Hanes’ Innovate-to-Elevate Strategy onto the Business and Leveraging
Global Supply Chain
– Acquisition Expected to Add Approximately $0.25 of Adjusted EPS in
2015 and Approximately $1.00 of Adjusted EPS Annually Within 3 to 4 Years
– Investor Conference Call and Webcast to be Held at 8:30 a.m. EDT
Today
WINSTON-SALEM, N.C.--(BUSINESS WIRE)--Jun. 25, 2014--
HanesBrands (NYSE: HBI), a leading marketer of everyday basic apparel
under world-class brands, today announced that it intends to acquire
DBApparel of France from Sun Capital Partners, Inc., provided
consultation with European and French works councils representing DBA
employees is completed and customary closing conditions are met.
DBA is a leading marketer of intimate apparel, hosiery and underwear in
Europe, new geography for Hanes. The all-cash transaction would be
accretive to adjusted earnings per share in the first 12 months after
closing, including an estimated $0.25 of adjusted EPS excluding actions
in 2015. With the realization of full benefits in three to four years,
the acquisition would add, on an annual basis, more than $875 million in
net sales, approximately $125 million in adjusted operating profit
excluding actions, and approximately $1.00 in adjusted EPS excluding
actions.
Hanes’ transaction offer values DBA at €400 million on an enterprise
basis (approximately $550 million at current exchange rates), or
approximately 7½ times EBITDA. Hanes intends to fund the acquisition
with cash on hand and third-party borrowings. The post-synergy multiple
is expected to be less than 4 times EBITDA. The acquisition could close
as soon as the third quarter 2014.
Hanes and DBA were formerly separate sister companies under the
ownership of Sara Lee Corporation. In 2006, Sun Capital acquired DBA and
Hanes spun off into an independent public company. Together, the two
companies would be one of the largest basic innerwear apparel companies
in the world and share the worldwide rights to the Playtex, Wonderbra
and DIM brands.
“Purchasing DBApparel would represent another great acquisition for
Hanes and a good use of our ample cash flow to generate significant
shareholder value,” 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. Together, we will
be a nearly $6 billion company utilizing our disciplined
Innovate-to-Elevate strategy and leveraging our global supply chain.”
DBA’s product offerings mirror those of Hanes’ Innerwear segment, and
the company is a leader across Western and Central Europe where Hanes
does not have a material presence. DBA sells intimate apparel, hosiery,
and men’s underwear, with nearly half of total company sales coming from
intimate apparel. DBA is No.1 in market share for intimate apparel in
France and Spain and No. 2 in Italy; No. 1 in men’s underwear in France
and Spain; and No. 1 in hosiery in France and Germany.
DBA sells innerwear in 16 countries, primarily in Western and Central
Europe. Approximately 45 percent of company sales are in France, while
the Germany/Austria market accounts for approximately 15 percent of
sales. Italy, Spain and Portugal together account for another 20 percent
of sales.
DBA’s strong brands include DIM, Playtex and Wonderbra in
multiple countries. DIM accounts for approximately 50 percent of
all sales. Strong national brands include Nür Die hosiery in
Germany, Lovable intimate apparel in Italy, and Abanderado
men’s underwear in Spain.
There are significant opportunities to leverage the increased scale of
the combined company and global supply chain. DBA utilizes a mix of
self-owned manufacturing and sourcing from third-party manufacturers.
Like Hanes, DBA self-manufactures the significant majority of its
hosiery products, with production facilities in France, Germany,
Slovakia and Romania. However, DBA outsources the production of
approximately 75 percent of its intimate apparel and underwear, whereas
Hanes owns significant intimate apparel and underwear production around
the world.
“DBA is a great company with an outstanding management team and
world-class employees,” said Gerald W. Evans Jr., Hanes’ chief operating
officer. “The company is well-run, a market leader, and mirrors our
Innerwear business. We are looking forward to welcoming the DBA team to
Hanes. Together, we have the world’s best innerwear brands, the most
knowledgeable employees in the industry, and the size and passion to be
the best basic apparel company in the world.”
Advisors
J.P. Morgan Securities LLC is serving as exclusive financial advisor to
Hanes. Cleary Gottlieb Steen & Hamilton 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.Hanes.com/investors.
The call is expected to conclude by 9 a.m.
Slides with additional background information about DBApparel and 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 2, 2014. 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
63743313.
Note on Non-GAAP Terms and Definitions
Adjusted EPS, adjusted operating profit, and EBITDA are not generally
accepted accounting principle measures. Hanes has chosen to provide
these non-GAAP 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 measures 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.
Adjusted EPS is defined as diluted EPS excluding acquisition-related
actions and the tax effect on them. The company believes that adjusted
EPS provides investors with an additional means of analyzing the
company’s performance absent the effect of acquisition-related expenses
and actions.
Adjusted operating profit is defined as operating profit excluding
actions, and the company believes that the measure provides investors
with an additional means of analyzing the company’s performance absent
the effect of acquisition-related expenses and actions.
EBITDA is defined as earnings from 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.
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 DB Apparel
(the “acquisition”), including the expected impact on HanesBrands’
sales, earnings and operating profit, 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 DB
Apparel, events that could give rise to a termination of the acquisition
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. 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.
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, Maidenform, Flexees,
JMS/Just My Size, barely there, Wonderbra and Gear
for Sports. The company sells T-shirts, bras, panties, shapewear,
men’s underwear, children’s underwear, socks, hosiery, and activewear
produced in the company’s low-cost global supply chain. Ranked No. 530
on the Fortune 1000 list, Hanes has approximately 49,700 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 2014, 2013 and 2012 Sustained Excellence Award winner
and 2010 and 2011 Partner of the Year award winner. More information
about the company and its corporate social responsibility initiatives,
including environmental, social compliance and community improvement
achievements, may be found at www.Hanes.com/corporate.
Source: HanesBrands
HanesBrands
News Media
Matt Hall, 336-519-3386
or
Analysts
and Investors
T.C. Robillard, 336-519-2115