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Underwear giant Hanes seeks Pacific Brands

NZ NewswireNZ Newswire 28/04/2016 Jonathan Underhill

New York Stock Exchange-listed HanesBrands has offered to buy Pacific Brands through a scheme of arrangement that values the dual-listed clothing group at $A1.1 billion ($NZ1.21 billion) and has won the support of the target company's board.

HanesBrands is offering A$1.15 a share for 100 per cent of Pacific Brands, a 22 per cent premium to its last traded price on the ASX and amounting to 2016 enterprise value-to-ebitda (earnings before interest, tax, depreciation and amortisation) multiple of 13.5 times.

Pacific Brands would pay a fully franked special dividend of 9.4 Australian cents a share if the transaction proceeds, reducing the cash amount of the offer price but providing up to 4 cents a share for those entitled to the franking credits, it said.

Pacific Brands rose 5.4 per cent to $1.18 on the NZX, where the shares are thinly traded.

"HanesBrands' unsolicited proposal represents a premium to current trading multiples and compares favourably to prior transactions in the global underwear and basic apparel sector," Pacific Brands said in a statement.

Pacific Brands owns the Sheridan, Bonds, Berlei, Tontine and Dunlop Flooring brands.

HanesBrands owns brands including Hanes, Champion, Playtex, Maidenform L'eggs and Wonderbra.

The proposal was unanimously recommended by the Pacific Brands board pending an independent assessment and in the absence of a superior offer, it said.

Pacific Brands' stock has soared 102 per cent in the past 12 months while the S&P/ASX 200 Index fell 13 per cent.

HanesBrands stock last traded at US$27.79 and has declined 13 per cent in the past 12 months. It is rated a 'buy' based on a Reuters survey.

The scheme of implementation deed requires shareholder approval, expected to be sought at a meeting in late June, and signoff from the Supreme Court of Victoria.

Macquarie Capital (Australia) Limited and Herbert Smith Freehills are advising Pacific Brands.

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