WINSTON-SALEM, N.C.—HanesBrands announces that it intends to purchase Knights Apparel, a company specializing in the sale of athletic logo apparel primarily geared to the college community.
Knights Apparel has licenses with more than 400 colleges and universities, including exclusive deals with most of the top-50 selling schools in terms of logo apparel sales. It also has a small section of its business devoted to pro sports-related apparel. The company sells its products to mass merchant retailers.
HanesBrands is paying $200 million for Knights Apparel and says it expects an additional $180 million in annual income once the acquisition is complete. Once merged, the companies are expected to have $450 million in combined annual sales of licensed and graphic apparel, HanesBrands says.
The acquisition is subject to antitrust review by the Federal Trade Commission, but HanesBrands says it could close as early as the second quarter of 2015.
“We see their business fitting into our low-cost, company-owned supply chain in two ways,” the company says in a Q&A it put together for investors. “First, they secure blank T-shirts and sweatshirts in the open market that we can supply directly. Second, they outsource their graphic art and printing, which we can integrate into our low-cost printing operations in Honduras, or in the case of short lead time products, into our quick-turn operations in Lenexa, Kansas and Reynosa, Mexico.”
The company says Knights Apparel will complement HanesBrands’ own Gear for Sports apparel that it sells into college bookstores.
“We held on-again, off-again acquisition discussions with Knights Apparel over the past couple of years,” the company writes.
Merit Capital Partners is a private equity firm that owns Knights Apparel. It was Merit's launch of a formal process to sell the company that prompted its offer, HanesBrands says.
“We believe we are the logical strategic buyer, given our leading position in the collegiate bookstore channel with our Gear for Sports business, our low-cost supply chain, our internal graphic printing capabilities, and our expertise in the mass channel,” HanesBrands says.
Knights Apparel was founded in 2001 and has approximately 210 employees. Its primary offices and a distribution center are located in Spartanburg, South Carolina. HanesBrands would not comment regarding specific plans following the merger, such as whether redundant positions would be cut once the companies are merged. It did say that the takeover and melding of the two would likely take two to three years.
HanesBrands also says that when the acquisition is completed, Knights Apparel CEO Joe Bozich will join HanesBrands.
Founded in 1901, HanesBrands employs more than 51,000 people working in more than 25 countries.