Leading apparel retailer Hanesbrands Inc. (HBI) has inked an agreement to take over collegiate logo apparel seller Knights Apparel for $200 million in cash.
The acquisition of Knights Apparel will be a strategic fit to the company. While Knights Apparel sells T-shirts, sweatshirts and other sports apparel with college logos and graphics primarily to mass merchant retailers, Hanes’ Gear for Sports division is already a leading seller of licensed collegiate apparel in university bookstores. Knights will get the benefit of company’s strong brands, company-owned apparel production, and company-owned graphic attribution and embellishment facilities. On the other hand, the acquisition will help the company to boost its licensed and graphic apparel business.
The takeover is scheduled to be completed in the second quarter of fiscal 2015. However, the closure is subject to approval from shareholders and regulatory authorities as well as the completion of other formalities.
We believe that the acquisition synergy and the company’s endeavor to innovate continuously will keep Hanesbrands competitively ahead of its peers.
The acquisition is expected to add to the company’s fiscal 2015 guidance issued before the stock split by $160 million in Hanesbrands’ net sales, $18 million in adjusted operating profit and 10 cents per share in earnings
Hanesbrands announced a 4-for-1 stock split on Jan 28, 2015 as part of its strategy to return greater value to shareholders.
Currently, Hanesbrands has a Zacks Rank #3 (Hold). Better-ranked stocks in the textile apparel sector include Gildan Activewear Inc. (GIL), Perry Ellis International Inc. (PERY) and Lululemon Athletica Inc. (LULU) all carrying a Zacks Rank #2 (Buy).
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