Authentic Brands to acquire Champion brand from Hanesbrands in a $1.2 billion deal.

• Authentic Brands Group has acquired Hanesbrands' Champion brand, as announced by Hanesbrands on Wednesday.
• An additional cash contingent consideration of up to $300 million could increase the deal's value to $1.5 billion if performance targets are achieved.
• In late September, Hanesbrands announced it was considering selling the business.

On Wednesday, the company announced that it had agreed to sell its global Champion business to Authentic Brands Group for $1.2 billion, including a contingent cash consideration.

According to a press release from Hanesbrands, the deal has the potential to reach $1.8 billion through an additional cash contingent consideration of up to $300 million if performance thresholds are met.

The company plans to use the $900 million net proceeds from the deal to accelerate debt reduction, according to Hanesbrands.

Hanesbrands shares surged around 12% during premarket trading Wednesday.

In the first quarter of 2024, Champion's adjusted EBITDA was approximately $75 million.

"Accelerating debt reduction and generating consistent growth and cash flow through a focused strategy on advancing its leading innerwear brands and optimizing its world-class supply chain is what we believe this transaction will enable Hanesbrands to achieve," said board chairman Bill Simon.

The board of directors at Hanesbrands approved a sale of Champion after unanimously agreeing to the terms.

In November 2023, CNBC reported that both Authentic Brands Group and WHP Global were interested in purchasing Champion.

In late September, Hanesbrands revealed it was considering selling off Champion, a move that came one month after Barington Capital Group started pushing the company to reduce expenses and increase profits amidst declining sales.