The $575 million acquisition of Maidenform Brands by HanesBrands would create a mass market intimate apparel powerhouse, but not everyone is happy with a sales price that is seen as undervaluing the takeover target.
HanesBrands agreed to acquire Maidenform Brands for $23.50 a share last week in a deal that appears to make a lot of sense from a business perspective given the companies’ respective product offerings and marketplace strengths. The price HanesBrands offered and the Maidenform board accepted represented a 30% premium to the average closing price of Maidenform over the past 30 days.
While that is a nice bump for shareholders who acquired an interest in Maidenform recently, longer term holders are less likely to feel good about an offer that is several dollars below Maidenform’s 52-week high price of $26.37.
Shortly after the deal was announced last Wednesday, multiple law firms issued press releases asserting that the deal may not be in the best interests of Maidenform shareholders and alleging the company’s board breached its fiduciary duties to shareholders.
However the situation works out for shareholders, retailers will be hoping the deal goes through because improved service levels and a richer product offering form a key rationale for the combination.
HanesBrands, known for brands such as Playtex, Bali, Just My Size, Barely There, Wonderbra, Champion, L’eggs, and of course Hanes, expects the deal to create growth and cost savings opportunities and increased scale to serve retailers.
HanesBrands would become a $5 billion intimate apparel powerhouse and also contends the acquisition will complement its “Innovate-to-Elevate” strategy which integrates the company’s world-class brands, low-cost supply chain and product innovation.
That’s because Maidenform sources all of its products from third-party manufacturers, while Hanes has company-owned global manufacturing supplemented by third-party manufacturing. Accordingly, Hanes expects to leverage its lower-cost supply chain to maximize the value of Maidenform to retailers and consumers.
“We look forward to adding Maidenform’s exciting brands and deep product expertise,” said Hanes chairman and Chief Executive Officer Richard A. Noll said.