A shopper walks past the American sports fashion brand's Champion store in Hong Kong.
Budrul Chukrut | fake images
Hanesbrands agreed to sell its global Champion business to Authentic Brands Group in a transaction valued at $1.2 billion, including contingent cash consideration, the company announced Wednesday.
The deal has the potential to reach $1.5 billion through additional contingent cash consideration of up to $300 million if performance thresholds are met, according to a press release from Hanesbrands.
The company expects to receive net proceeds of $900 million from the deal, according to the statement. Hanesbrands said the company plans to use the net proceeds to accelerate debt reduction.
Hanesbrands shares rose more than 5% during Wednesday's trading session.
As of the end of the first quarter of 2024, Champion generated around $75 million of adjusted EBITDA over the trailing 12 months.
“We believe this transaction will allow the company to accelerate its debt reduction while also positioning Hanesbrands to deliver consistent growth and cash flow generation through a strategy focused on advancing its leading underwear brands and the optimization of its world-class supply chain,” said Chairman of the Board Bill Simon. .
The deal, which Hanesbrands' board of directors unanimously approved, comes months after the company said it was considering selling Champion.
CNBC reported in November 2023 that Authentic Brands Group and brand management firm WHP Global were interested in purchasing Champion.
Hanesbrands first announced it was considering offloading Champion in late September, just over a month after activist firm Barington Capital Group began pressuring Hanesbrands to cut costs and generate cash amid falling sales. .
