Underwear maker Hanesbrands Inc said it will buy former sister company DBApparel in a deal valuing the company at 400 million euros ($545 million) on an enterprise basis, bringing back together two global lingerie brands.
Hanesbrands and DBApparel were both owned by Sara Lee Corp until 2006, when private equity firm Sun Capital Partner Inc bought Paris-based DBApparel.
The deal will bring together the Wonderbra and Playtex brands, which DBApparel had sold in Europe. HanesBrands holds the rights for the two lingerie brands elsewhere and has other clothing brands, such as Hanes and Champion.
Hanesbrands said the deal is expected to add more than $875 million in annual net sales and about $125 million in adjusted operating profit within three or four years of closing.
The cash deal, which values DBApparel at about 7.5 times earnings before interest, tax, depreciation, and amortisation is expected by Hanesbrands to close in the third quarter.
Hanesbrands bought rival Maidenform Brands Inc last July for $547 million in its biggest acquisition to expand its range of lingerie for younger consumers.
Analysts had expected Hanesbrands to make acquisitions in the second half of this year, given its strong cash flow. It had cash and cash equivalents of $151.1 million as of March 29.
Hanesbrands said it would use cash on hand and third-party borrowings to fund the DBApparel deal, which also requires consultation with European and French works councils representing its employees.
DBApparel outsources about 75 percent of its production while Hanesbrands owns factories around the world.
DBApparel's other innerwear brands include DIM, which it sells primarily in Western and Central Europe, with DIM accounting for about half of total sales.
The company gets about 45 percent of its sales from France, about 15 percent from Germany/Austria, and 20 percent from Italy, Spain and Portugal combined.
Hanesbrands got only about 11 percent of its $4.63 billion revenue from outside the United States last year.
J.P. Morgan Securities LLC is serving as financial advisor to Hanesbrands.
The company's shares have risen 66 percent since its purchase of lingerie maker last year. They closed at $88.54 on the New York Stock Exchange on Tuesday.