Analyst Summary
- Kontoor Brands is acquiring Helly Hansen for approximately $900 million.
- The acquisition is expected to close in the second fiscal quarter of 2025.
- Helly Hansen is projected to generate more than $680 million of revenue and $80 million of adjusted EBITDA for full year 2025.
- The purchase price reflects an approximate 11x transaction multiple based on Kontoor’s full year 2025 adjusted EBITDA outlook for Helly Hansen, excluding synergies.
- The acquisition is expected to accelerate Kontoor’s revenue, earnings growth, and cash flow profile.
- The acquisition will be funded through a combination of excess cash on hand and new debt financing.
- Net leverage is expected to be less than 3x trailing twelve months’ pro forma adjusted EBITDA at the transaction close date.
- The company expects to return to a targeted net leverage range of between 1.0x and 2.0x within 12 months.
- The acquisition is expected to be immediately revenue, earnings, and cash flow accretive in 2025, excluding synergies.
Potential Implications
Company Performance
- Accelerated revenue and earnings growth.
- Enhanced cash flow profile.
- Increased penetration in the Outdoor and Workwear categories globally.
- Diversified consumer, geographic, category, and channel footprint.
- Improved profitability and net working capital management.
- Increased capital allocation optionality once financial leverage has been reduced.
Stock Price
- Accretive to Kontoor Brands’ existing TSR commitment through enhanced fundamental growth model.
- Strong financial returns and meaningful earnings and cash flow accretion in 2025, excluding synergies.