Apparel company Hanesbrands announced on Thursday that they have completed a debt refinancing that will give the Company more financial flexibility to make acquisitions. Earlier this month, Hanesbrands made a public $500 million notes offering and secured a $1.15 billion credit facility in order to pay down its debt. The Company's goal is to reduce debt by $300 million in 2009 and 2010, cutting interest expense by $20 million to $25 million in 2010 and 2011.
"Our new debt structure is simpler and gives us greater flexibility to execute multiple strategies for earnings growth," said Hanesbrands' CFO E. Lee Wyatt Jr. The Company will be targeting takeovers in the $200 to $300 range.
The big question is, what type of companies will Hanesbrands go after? For the past couple of years, Hanesbrands has been focused on vertical integration with the acquisition of a few foreign textile plants. Now it seems Hanesbrands is aiming for companies that will improve top line growth instead of offering operational improvements. This will most likely mean entering new categories-perhaps it will be in outdoor apparel?
Hanesbrands brands Champion, together with Duofold, recently began the Climb Everest With Us campaign, to be seen as serious players in the outdoor industry. Mountaineer Jamie Clark and team recently climbed Pumori and will head to Everest this Spring wearing a complete new line of head-to-toe Champion outdoor apparel. I can see Hanesbrands pushing hard to grab a share of the growing outdoor industry pie, much like Eddie Bauer has done with First Ascent and Adidas with their new jacket line.
So what are your thoughts on Hanesbrands and the outdoor industry? Who might they acquire?