Hanesbrands completes purchase of Maidenform for $583 million

Posted on: 11:31 am, October 7, 2013, by

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WINSTON-SALEM, N.C. — Hanesbrands Inc. said Monday it has completed the largest purchase in company history, buying Maidenform Brands Inc. for $583 million in cash.

The purchase price was about $8 million higher than the offer Hanesbrands announced July 24. Maidenform shareholders approved the deal Thursday.

The deal brings the Maidenform, Flexees and Self Expressions bra and shapewear brands into Hanesbrands’ intimate-apparel portfolio, as well as the basic apparel heritage of a 91-year-old company.

Hanesbrands said Sept. 10 that it could take until November before Maidenform employees are told of “high-level integration plans.” Typically, the acquiring company brings administrative and back-office jobs to its headquarters.

Hanesbrands spokesman Matt Hall said on July 24 “you would expect there to be some redundancies within two publicly traded companies.” Maidenform, based in Iselin, N.J., has a distribution center in the Fayetteville area, while Hanesbrands has a major distribution center in Rural Hall.

Hanesbrands paid about a 30 percent premium to buy Maidenform at $23.50 a share. It expects the deal to contribute more than $500 million in incremental annual sales, 60 cents in diluted earnings per share, $80 million of operating profit, and $65 million of free cash flow within three years.

The company said it would discuss more financial details of the purchase during its third-quarter 2013 investor conference call, which it expects will be held in late October or early November.

“Maidenform is a great company with strong brands and a rich tradition of innovation in intimate apparel,” Rich Noll, Hanesbrands’ chairman and chief executive, said in a statement Monday.

“The Maidenform business and brands are a perfect addition and complement to our core business and brands. This is an excellent use of our strong free cash flow to create value.”

Hanes funded the acquisition with cash on hand and short-term borrowing on its revolving credit line, which will be retired through free cash flow.

In a memo sent last month to Hanesbrands employees, Noll reiterated that senior executives from both companies were engaged in planning the merger.

“Teams from both companies representing sales and marketing, international, direct to consumer, design and merchandising, finance, supply chain, human resources and information technology have been formed and are collaborating to develop plans around operational and functional issues,” Noll said.

The companies are using consulting firm Oliver Wyman Group to aid the integration.

Maidenform said in a regulatory filing that it had 1,250 employees as of Dec. 29. Hanesbrands has about 2,500 employees in Forsyth County.

“We understand that an acquisition can create uncertainty and concern for employees,” Noll said last month.

“’We are working diligently on the integration planning process, and we pledge to communicate as much as we can as soon as we can about the plans and the timeline to execute them.”

Some analysts say Hanesbrands may find itself in the crosshairs of private-equity and industry rivals because of its impressive success as an independent company.

Bloomberg News reported in August that several analysts consider Hanesbrands an attractive takeover target, primarily because it offers “one of the cheapest valuations in the retail industry.”

Eric Tracy, an analyst with Janney Montgomery Scott LLC, said Hanesbrands’ board of directors could demand a high enough premium to discourage potential buyers since it has significant growth opportunities on its own.

Hall said it is company policy to not comment on analyst speculation.

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