By Allison Watkinson
TLL Reporter
Authentic Brands Group (ABG) has entered into a definitive agreement with HanesBrands to acquire the IP and operating assets for Champion athletic apparel.
Initially created in 1919, the Champion brand focuses on creating and distributing high-quality athletic and lifestyle apparel.
The brand currently operates in more than 90 countries across the globe, with more than 40% of its business hailing from outside North America.
“We are excited to acquire Champion, a brand that shares our pioneering spirit,” said Authentic CEO, Jamie Salter. “Over the last few years, the addition of new brands together with the expansion of live events has grown Authentic into a world leading sports and entertainment licensing company. Bringing Champion into the fold further expands our position in this space.”
Following the acquisition, Authentic plans to use its extensive network of partners to convert the Champion brand to a licensing business model.
ABG is currently in discussions with several existing and potential partners across the globe for manufacturing, in-person retail, e-commerce and wholesale operations.
“Our successful efforts igniting Reebok’s momentum in sports have created a playbook to achieve a similar feat with Champion,” said Authentic CBO, Nick Woodhouse. “With expansive reach, differentiated channel strategy and a balanced strength across its women’s and men’s businesses, Champion has profoundly influenced sports culture,” added Woodhouse. “This is the perfect time for the brand to make a significant impact as women’s sports continue to broaden their presence and fandom worldwide.”
The definitive acquisition agreement currently has a transaction value of approximately 1.2 billion dollars, with the potential to reach up to 1.5 billion dollars through an additional contingent cash consideration based on performance achievement thresholds.
HanesBrands expects net proceeds from the transaction to reach approximately 900 million, with the inclusion of working capital adjustments, other customary transaction costs and excluding the contingent cash consideration.
The company will utilize all of its net proceeds from the transaction to support its debt reduction initiative.
“Over the past three years, we have taken necessary actions to enhance the company’s operations and financial performance – returning to historical gross margins, reducing our cost structure, lowering our debt levels, and generating consistent cash flow,” said HanesBrands CEO, Steve Bratspies. “The successful completion of this transaction further simplifies our business, deleverages our balance sheet and enhances the company’s operations and financial performance,” added Bratspies. “As we begin the next chapter for HanesBrands, we believe we’re in an even stronger position to further extend our leadership in innerwear, pursue new cost reduction opportunities as we ensure we have the right operating structure in place, and advance our multi-year flywheel to drive strong shareholder returns.”
Upon completion of the transaction, HanesBrands plans to focus on expanding its collection of underwear, shapewear and innerwear brands to reach a broader range of consumer demographics.
This will include significantly increased investment in its Hanes, Bonds, Maidenform and Bali brand labels.
“Following a thorough review of options for the global Champion business with the support of our financial and legal advisors, we are pleased to have reached this agreement with Authentic Brands Group that we believe maximizes value for Champion and best positions HanesBrands for long-term success,” said HanesBrands chair, Bill Simon. “Importantly, we believe this transaction will enable the Company to accelerate its debt reduction while positioning HanesBrands to deliver consistent growth and cash flow generation through a focused strategy on advancing its leading innerwear brands and optimizing its world-class supply chain.”
The transaction currently remains subject to customary closing conditions and is expected to be fully completed in the second half of 2024. HanesBrands will continue operating the Champion brand in select regions for a time to ensure a smooth transition for the business.
Goldman Sachs & Co. and Evercore are serving as financial advisors to HanesBrands.
Kirkland & Ellis and Jones Day are serving as the company’s legal advisors.
J.P. Morgan Securities and BofA Securities are acting as financial advisors for ABG.
Latham & Watkins is serving as Authentic’s legal advisory firm.
HanesBrands Signs Agreement to Sell Champion Business to ABG
