) has announced that it intends to take over Europe-based intimate
apparel company DBApparel (DBA), for approximately Euro 400 million
or $550 million.
The buyout is in accordance with Hanesbrands' acquisition
strategy as DBA sells intimate apparel - a core category of
Hanesbrands. A major portion of the company's revenues comes from
intimate apparel. It occupies No. 1 position 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
The takeover will facilitate Hanesbrands' entry into the
untapped market of Europe. Moreover, DBA's products complement
those of Hanesbrands'. Further, both Hanesbrands and DBA
manufacture majority of the products instead of sourcing them
The acquisition will bring DBA's popular brands like DIM
(popular in several Western and Central European countries) and
Hanesbrands' market leading brands like Playtex, Bali, Just My
Size, Hanes, Barely There, Wonderbra, Champion and L'eggs under one
banner. Strong national brands like NürDie hosiery in Germany,
Lovable intimate apparel in Italy, and Abanderado men's underwear
in Spain will also be added to Hanesbrands' portfolio. Hanesbrands
expects the DBA acquisition to add adjusted earnings of
approximately 25 cents per share in 2015 and approximately $1.00
annually by 2018.
Hanesbrands intends to finance the takeover with cash on hand
and third-party borrowings. J.P. Morgan Securities LLC of
JPMorgan Chase & Company
) will finance the takeover which is expected to be closed in the
third quarter of fiscal 2014 once the regulatory compliances of the
deal are met.
The takeover of DBA comes within a year of Hanesbrands' buyout
of the underwear apparel chain, Maidenform Brands Inc. in Oct 2013.
The acquisition boosted one of Hanesbrands' core categories,
intimate apparel, with the addition of popular brands like Flexees,
Lilyette, Self Expressions and Sweet Nothings. The entire operation
of the Maidenform Brands was integrated into Hanesbrands' system
within three months of the deal closure. Hanesbrands expects to
accrue profit from the Maidenform business by fiscal 2015.
We are encouraged by the Zacks Rank #2 (Buy) company's strategic
moves in order to bolster its presence in the global intimate
apparel and hosiery category. Like Maidenform, we expect the DBA
acquisition to strengthen the intimate apparel category. In fact,
the new acquisition will go a step ahead with its operations in
Europe, where Hanesbrands did not have a presence.
Other Stocks to Consider
A couple of stocks in the same sector that are also performing
Columbia Sportswear Company
Michael Kors Holdings Limited
). Both the stocks sport the same Zacks Rank as Hanesbrands.
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