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Hanes lobs bid for Bonds maker Pacific Brands

Thursday, 28 Apr 2016 09:06:18 | Michael Janda

The band of a pair of Bonds undies. (Trevor Gillespie: ABC)

US clothing giant HanesBrands has lobbed a surprise billion-dollar bid for Australia's Pacific Brands, which sells Bonds, Sheridan and Berlei, among other labels.

The all-cash offer of $1.15 per share is worth $1.1 billion, and is pitched at a 22 per cent premium to Pacific Brands' last closing price of 94 cents.

The bid is prices at 28.6 times Pacific Brands' earnings last financial year, and more than 21 times its expected earnings this financial year.

Pacific Brands' board unanimously recommends that shareholders accept the offer, in the absence of a better proposal.

"We believe the 100 per cent cash proposal from HanesBrands is compelling and represents an attractive premium to our long term average share price and the implied financial year '16 EV[enterprise value]/EBITDA [pre-tax/interest earnings] acquisition multiple of 12.0x compares favourably to the multiples paid in other comparable transactions," noted Pacific Brands chairman Peter Bush.

"The HanesBrands proposal represents an opportunity for Pacific Brands shareholders to realise attractive value for their shares and to de-risk future growth opportunities available to the business."

Takeover to further expand 'world's largest' underwear firm

If the takeover does proceed, brands such as Bonds, Berlei and Sheridan would be wrapped into the existing portfolio of what HanesBrands says is the world's largest marketer of basic apparel.

HanesBrands already owns the Hanes, Champion, Playtex and Wonderbra brands amongst many others.

The company is over a hundred years old, having been founded at the turn of the last century in 1901.

The takeover would represent a significant turnaround for Pacific Brands, which posted large losses and hit a share price low of just 17 cents after the financial crisis, and was trading as low as 32 cents less than a year ago.

Mr Bush has attributed a change in management for the company's rapid turnaround.

"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," he added in a statement.

Mr Bush said that the deal will give Pacific Brands additional scale, with associated benefits in sourcing production, financial flexibility and the opportunity to promote core brands such as Bonds and Sheridan.

The deal will be subject to approval from Pacific Brands shareholders, as well as regulatory approvals, such as from the Foreign Investment Review Board.

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