U.S. clothing manufacturer Hanesbrands Inc. (NYSE: HBI) agreed to buy Australia’s Pacific Brands Ltd. for A$1.1 billion ($835 million), gaining iconic underwear labels including Bonds and Jockey. The North Carolina-based company offered A$1.15 per share in cash, 22 percent more than the target’s closing price on Wednesday, according to a statement to the Australian stock exchange.
The board of the Melbourne-based company unanimously recommended the deal. Pacific Brands shares surged 23 percent to A$1.155 at 11:10 a.m. in Sydney.
The takeover, the sixth by Hanesbrands in only three years, will give it Australia’s leading underwear labels and the home furnishing brand Sheridan. Shares in Pacific Brands, which also operates in China, Indonesia and the U.K., have more than doubled in the past year.
“Hanesbrands bring something to the table that the company cannot achieve themselves in their current form,” said Simon Mawhinney, Sydney-based chief investment officer at Allan Gray Australia -- the largest shareholders in Pacific Brands. “We’ll have to make an assessment in the coming days and weeks, but it seems like a reasonable price.”
Hanesbrands said it plans to sell the target’s Tontine pillow-making business and Dunlop Flooring, Australia’s biggest supplier of foam underlay, as they had a “limited strategic fit.”
“The acquisition is expected to result in significant savings through the use of Hanes’ large-scale, low-cost global supply chain,” Hanesbrands said in a separate statement. “This will also add geographic scale.”
In early-April, Hanesbrands also announced plans to acquire athletic clothing designer Champion Europe. Earlier targets for the company include its June 2014purchase of DBApparel from an affiliate of Sun European Partners LLP. Hanesbrands also acquired Maidenform, Lilyette, Self Expressions and Sweet Nothings brands in October 2013 through a deal for Maidenform Brands Inc.