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Cash Transaction Values Publicly Traded Pacific Brands Limited at
US$800 Million
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Pacific Brands’ Portfolio Includes Bonds, Australia’s No. 1
Men’s and Women’s Underwear Basics Brand and Berlei, the
Country’s Leading Premium Bra Brand
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Combination to Create Significant Value by Supporting Pacific
Brands’ Growth Plans and Leveraging HanesBrands’ Global Supply Chain
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Investor Conference Call and Webcast to be Held at 9 a.m. Today,
April 28, 2016
WINSTON-SALEM, N.C.--(BUSINESS WIRE)--Apr. 28, 2016--
HanesBrands (NYSE: HBI), a leading worldwide marketer of underwear,
intimate apparel and activewear, announced that it has entered into a
definitive agreement to acquire Pacific Brands Limited, the leading
underwear and intimate apparel company in Australia.
The acquisition would be Hanes’ sixth in the past three years and would
add Australia and New Zealand to the list of countries where the company
holds the No. 1 or No. 2 market share position for underwear, intimate
apparel or hosiery. The countries include the United States, Canada,
Mexico, Brazil, France, Germany, Italy, Spain, and South Africa.
HanesBrands projects that under its ownership publicly traded Pacific
Brands (ASX: PBG) would have calendar 2016 net sales in its core
Underwear and Sheridan businesses of approximately AUD800 million
(US$600 million) and adjusted operating profit of AUD75 million (US$56
million). The Melbourne-based company, which has a June fiscal year end,
sells primarily in Australia with some distribution in New Zealand, the
United Kingdom and Asia.
The transaction is valued at approximately US$800 million on an
enterprise-value basis, or slightly more than 10 times projected
calendar 2016 EBITDA (for all businesses), and would pay Pacific Brands
shareholders AUD1.15 per share.
The all-cash transaction is expected to be immediately accretive to
adjusted earnings per share and deliver an after-tax internal rate of
return in the mid-teens. It is projected to deliver full benefits within
three years, attaining adjusted operating profit of approximately US$100
million, contributing approximately US$0.25 to Hanes’ adjusted EPS.
“Pacific Brands is a natural addition to the HanesBrands portfolio with
its strong market-leading brands that will be complemented by our global
supply chain,” Hanes Chairman and Chief Executive Officer Richard A.
Noll said. “In the span of 10 years, we have transformed the company
through acquisitions and our Innovate-to-Elevate initiatives. We have
tripled operating profits and expanded from a $4 billion company
concentrated in the United States to a $7 billion global underwear and
activewear powerhouse spanning the Americas, Europe and Asia-Pacific.
This foundation will serve as a catalyst for even further growth and
value creation for the foreseeable future.”
Pacific Brands has three business units – Underwear, Sheridan, and
Tontine & Dunlop. The company has undergone significant restructuring
over the past two years to streamline its portfolio to focus on the core
Underwear and Sheridan businesses.
Hanes intends to divest the Tontine pillow business and Dunlop Flooring
business, which Hanes does not consider part of Pacific Brands’ core.
Combined, they account for 12 percent of sales and operating profit
(excluding corporate overhead allocation). Hanes is not including sales
and profits for those businesses in its long-term projections.
Pacific Brands’ restructuring and focus on Underwear and Sheridan has
resulted in significant sales and profit growth. Based on fiscal 2016
expectations, the core businesses have a combined two-year compound
annual sales growth rate of approximately 8 percent.
Of the core business, Underwear accounts for three-fourths of sales and
includes underwear, bras, socks, hosiery, babywear and outerwear. The
Underwear group is successfully executing growth strategies to reshape
its wholesale business, expand distribution, and increase retail and
online sales. The group operates more than 150 company retail stores and
retailer shop-in-shops.
Underwear has a three-year compound annual sales growth rate of 7
percent. The company’s biggest Underwear brand is the fast-growing Bonds,
an iconic century-old brand that holds the No. 1 market share for men’s
underwear, women’s underwear, children’s underwear, babywear and socks,
as well as the No. 3 position in bras. In addition, the Berlei
brand of premium bras sold in department stores is No. 2 in overall bra
market share and No.1 in sports bras.
Bonds sales have increased 40 percent since 2013. In the first
half of fiscal 2016, retail sales at Bonds stores increased 39
percent, driven by store openings and 22 percent comparable-store sales
growth.
The acquisition is expected to result in significant savings through the
use of Hanes’ large-scale, low-cost global supply chain. Pacific Brands
sources the significant majority of its underwear and intimate apparel
production from third-party manufacturers, while Hanes relies primarily
on company-owned manufacturing. The acquisition also would add to Hanes’
global product design, development and innovation capabilities that span
the Americas, Europe and the Pacific Rim.
The Sheridan business, which accounts for a quarter of the core
business, has benefited from newly combined infrastructure with the
Underwear group. Sheridan markets luxury linens, towels, bedding
accessories, and loungewear in the retail and wholesale channels and has
recently launched babywear.
“Pacific Brands, led by a top-notch management and marketing team, will
make a significant addition to our worldwide portfolio of leading
brands,” said Hanes Chief Operating Officer Gerald W. Evans Jr. “We
believe we can make meaningful contributions to the continued execution
of the Pacific Brands growth strategy and support it with our
world-class low-cost supply chain. This will also add geographic scale
that will benefit our existing Champion Australia business.”
Hanes will seek to retain the Pacific Brands’ senior management team to
run the business after the acquisition.
The definitive purchase agreement has been unanimously approved by the
boards of directors of both companies. The acquisition, which is subject
to Pacific Brands shareholder approval and other customary closing
conditions, is expected to close in the third quarter of 2016. Goldman,
Sachs & Co. is serving as exclusive financial advisor to Hanes, while
Baker & McKenzie is serving as legal counsel.
Hanes has updated its investor frequently-asked-questions document,
which is available at www.Hanes.com/faq.
Webcast Conference Call
Hanes will host a live internet webcast of its investor conference call
to discuss the acquisition announcement at 9 a.m. EDT today, April 28,
2016. The webcast may be accessed on the investor page of the Hanes
corporate website, www.HanesBrands.com.
The call is expected to conclude by 9:30 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, April 28,
through midnight EDTMay 12, 2016. 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 2123588.
Note on Non-GAAP Terms and Definitions
Adjusted operating profit, adjusted EPS, and EBITDA are not generally
accepted accounting principle measures.
Adjusted operating profit is defined as operating profit excluding
charges related to acquisitions and other actions, and adjusted EPS is
defined as diluted EPS excluding charges related to acquisitions and
other actions. EBITDA is defined as earnings from continuing operations
before interest, taxes, depreciation and amortization.
The company believes that adjusted operating profit, adjusted EPS, and
EBITDA are useful measures to enable additional analyses of past,
present and future operating performance and as a supplemental means of
evaluating company operations absent the effect of acquisition-related
charges and other actions. 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.
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 Pacific
Brands (the “Acquisition”), including the expected impact on
HanesBrands’ sales, adjusted operating profit and adjusted EPS, 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 Pacific Brands and other acquisitions;
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;
the level of expenses and other charges related to the Acquisition and
the funding thereof; any inadequacy, interruption, integration failure
or security failure with respect to our information technology; the
impact of significant fluctuations and volatility in various input
costs, such as cotton and oil-related materials, utilities, freight and
wages; our ability to manage our inventory effectively and accurately
forecast demand for our products; the highly competitive and evolving
nature of the industry in which we compete; the risk of improper conduct
by any of our employees, agents or business partners that threatens our
reputation and ability to do business; our complex multinational tax
structure; significant fluctuations in foreign exchange rates; our
ability to access sufficient capital at reasonable rates or commercially
reasonable terms or to maintain sufficient liquidity in the amounts and
at the times needed; risks associated with our indebtedness; and other
risks identified from time to time in our most recent Securities and
Exchange Commission reports, including our annual report on Form 10-K
and quarterly reports on Form 10-Q. Since it is not possible to predict
or identify all of the risks, uncertainties and other factors that may
affect future results, the above list should not be considered a
complete list. 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, based in Winston-Salem, N.C., is a socially responsible
leading marketer of everyday basic innerwear and activewear apparel in
the Americas, Europe and Asia under some of the world’s strongest
apparel brands, including Hanes, Champion, Playtex, DIM,
Bali, Maidenform, JMS/Just My Size, L’eggs, Wonderbra,
Nur Die/Nur Der, Lovable and Gear for Sports. The company
sells T-shirts, bras, panties, shapewear, underwear, socks, hosiery, and
activewear produced in the company’s low-cost global supply chain. A
member of the S&P 500 stock index, Hanes has approximately 65,300
employees in more than 40 countries and is ranked No. 490 on the Fortune
500 list of America’s largest companies by sales. Hanes takes pride in
its strong reputation for ethical business practices. The company is the
only apparel producer to ever be honored by the Great Place to Work
Institute for its workplace practices in Central America and the
Caribbean, and is ranked No. 160 on the Forbes magazine list of
America’s Best Employers. For seven consecutive years, Hanes has won the
U.S. Environmental Protection Agency Energy Star sustained
excellence/partner of the year award – the only apparel company to earn
sustained excellence honors. The company ranks No. 246 on Newsweek
magazine’s green list of 500 largest 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 at www.Hanes.com/corporate.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160428005550/en/
Source: HanesBrands
HanesBrands
News Media:
Matt Hall, 336-519-3386
or
Analysts
and Investors:
T.C. Robillard, 336-519-2115