HanesBrands Inc. has finally crossed the finish line with Champion, cutting a deal to sell the active brand to Authentic Brands Group for $1.2 billion, with the chance to pull in up to another $300 million depending on the brand’s performance.
The deal, which includes the brand and some of its operating assets, confirms an April 2 report in WWD that Authentic had reached an initial deal to buy the brand for more than $1 billion.
HanesBrands, which will use the money to pay down debt, started exploring its options for the ailing Champion brand in September.
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The company has been working to reposition the business, but it’s been a difficult process for Champion, which saw sales fall by 26 percent in the first quarter.
Some strategic players were said to have taken a look at Champion, but the potential of its brand won out, leading to the deal with Authentic, which specializes in buying intellectual property and then tapping partners to help build brands anew.
“This strategic move demonstrates Authentic’s commitment to expanding its portfolio of iconic sports, lifestyle, entertainment and media brands and will increase its system-wide annual retail sales to more than $32 billion worldwide,” Authentic said in a statement.
The deal extends Authentic’s reach in the growing active segment, where the company already owns Reebok.
Jamie Salter, chairman and chief executive officer of Authentic, said; “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.”
Founded in 1919, the brand is known for its “C” logo and collaborations with brands such as Supreme and Todd Snyder. Champion currently operates in more than 90 countries with over 40 percent of business coming from outside North America.
Champion’s long history will give Authentic plenty to work with once the deal closes, expected in the second half.
Nick Woodhouse, president and chief brand officer of Authentic, said: “Our successful efforts igniting Reebok’s momentum in sports have created a playbook to achieve a similar feat with Champion. With expansive reach, differentiated channel strategy and a balanced strength across its women’s and men’s businesses, Champion has profoundly influenced sports culture. 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 deal also gives HanesBrands a chance to build in innerwear with its Hanes, Bonds, Maidenform and Bali brands.
Steve Bratspies, HanesBrands’ CEO, said the sale will ultimately simplify the business, improve its balance sheet and enhance operations.
“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,” Bratspies said.
Investors, who have been waiting for the deal to be announced, were feeling more positive on the business and shares of HanesBrands up nearly 4 percent to $5.25 in morning trading on Wednesday.
Goldman Sachs & Co. and Evercore advised HanesBrands while Authentic worked with J.P. Morgan and BofA Securities.
