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US underwear giant Hanes seeks Pacific Brands in billion dollar offer

HanesBrands is offering $A1.15 a share for 100% of Pacific Brands.

Jonathan Underhill
Thu, 28 Apr 2016

NYSE-listed HanesBrands is offering to buy Pacific Brands through an arrangement valuing the dual-listed clothing group at $A1.1 billion, winning the support of the target company's board.

HanesBrands is offering $A1.15 a share for 100% of Pacific Brands, a 22% premium to its last traded price on the ASX, amounting to 2016 enterprise value-to-ebitda (earnings before interest, tax, depreciation and amortisation) multiple of 13.5 times.

Pacific Brands would pay a fully franked special dividend of 9.4Ac a share if the transaction proceeds, reducing the cash amount of the offer price but providing up to 4c a share for those entitled to the franking credits, it says. Pacific Brands rose 5.4% to $1.18 on the NZX, where the shares are thinly traded.

"HanesBrands' unsolicited proposal represents a premium to current trading multiples and compares favourably to prior transactions in the global underwear and basic apparel sector," Pacific Brands says in a statement.

Pacific Brands owns the Sheridan, Bonds, Berlei, Tontine and Dunlop Flooring brands. It returned to profit in the first half of 2015 and reinstated dividends with a payout ratio of 60%. The turnaround marked six years of restructuring, which included selling loss-making brands, shifting production to Asia, and putting more focus on retailing through its own stores.

HanesBrands had indicated the Tontine and Dunlop Flooring businesses were of limited strategic value and would be sold if the deal went ahead. HanesBrands owns brands including Hanes, Champion, Playtex, Maidenform L'eggs and Wonderbra.

"HanesBrands has recognised the work done over the past two years that has seen the board and management team under CEO David Bortolussi's leadership reshape and simplify the business to focus on our highest quality brands and improve operational performance," says chairman Peter Bush.

"That work resulted in a significant re-rating of the company and its share price. Shareholders now have an opportunity to realise a further increase in value through a compelling proposal."

The proposal was unanimously recommended by the Pacific Brands board pending an independent assessment and in the absence of a superior offer, it said.

Pacific Brands' stock has soared 102% in the past 12 months while the S&P/ASX 200 Index fell 13%.

HanesBrands stock last traded at US$27.79 and has declined 13% in the past 12 months. It is rated a 'buy' based on a Reuters survey.

The scheme of implementation deed requires shareholder approval, expected to be sought at a meeting in late June, and signoff from the Supreme Court of Victoria.

Macquarie Capital (Australia) Limited and Herbert Smith Freehills are advising Pacific Brands.

(BusinessDesk)

Jonathan Underhill
Thu, 28 Apr 2016
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US underwear giant Hanes seeks Pacific Brands in billion dollar offer
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