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Published on : Feb 26, 2015

Hanesbrands Inc., a leading apparel retailer, has signed an agreement that will allow it to take over Knights Apparel for US$200 million in cash. The latter is a collegiate logo apparel seller.

Analysts believe that the acquisition is a strategic one that will provide the right fit to the parent company. White Knights Apparel sells sweatshirts, T-shirts, and other sports apparel with college logos and graphics that they sell mainly to mass merchant retailers. Hanesbrands’ Gear for Sports division is already the leading retailer of licensed collegiate apparel in university bookstores.

Knights will be able to avail the benefits of the brand strength of Hanes along with the company-owned apparel production and the embellishment and graphics attribution facilities. The acquisition will help Hanesbrands to boost its number of licenses in the graphic apparel business.

The acquisition will be complete during Q2 2015. The closure is subject to approval from shareholders and regulatory authorities as well as the completion of multiple formalities.

Analysts also said that the synergy of acquisition and the company’s will to constantly innovate will keep them in the lead against their competitors.

The takeover is said to add to the company’s FY2015 guidance that will be issues by US$160 million in the net sales of Hanesbrands. There will be an additional US$18 million in adjusted profit and an increase in the earnings by 10 cents per share.

On January 2015, Hanesbrands announced a four for one stock split, which is a part of its strategy to give more value to their shareholders.

The apparel maker currently lies at number 3 on Zachs Rank. Other stocks that are ranked better include Gildan, Perry Ellis, and Lululemon, all of which carry a second Zachs Rank.