Shares of lifestyle apparel company known for brands like Wrangler and Lee, Kontoor Brands, Inc. KTB, are trading lower in premarket on Wednesday.

Kontoor Brands has announced its acquisition of Helly Hansen, a brand specializing in outdoor and workwear. Under the terms of the deal, Kontoor will acquire full ownership of Helly Hansen from Canadian Tire Corporation.

The acquisition price is around $900 million, which corresponds to an estimated transaction multiple of 11 times, based on Kontoor’s projected adjusted EBITDA for Helly Hansen in 2025, excluding any synergies.

Kontoor anticipates that Helly Hansen will produce over $680 million in revenue and $80 million in adjusted EBITDA for the full year of 2025.

This move is expected to strengthen Kontoor’s growth strategy, broaden its footprint in the fast-growing outdoor and workwear sectors, and drive both revenue and profit increases.

“Given our global platform and proven track record of operational excellence in owning brands rooted in heritage, quality, authenticity and innovation, Kontoor Brands is uniquely positioned to partner with Helly Hansen management to scale and elevate the business globally,” said Chairman, President and CEO, Scott Baxter.

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Kontoor intends to improve Helly Hansen’s operating margin and drive significant cash flow growth over time through better profitability and effective capital management.

The deal will enable Kontoor to expand its portfolio by increasing its presence in Europe, the Non-U.S. Americas, and Asia Pacific.

The expansion is expected to appeal to a younger, wealthier consumer demographic, complementing Kontoor’s U.S. market presence. Also, the facilitation will enhance supply chain operations and technological capabilities for both brands.

Kontoor intends to finance the acquisition through a combination of existing cash and new debt. As of September 2024, the company held $269.4 million in cash and equivalents.

The company’s board has given its approval, and the transaction is expected to be finalized by the second fiscal quarter of 2025.

Preliminary Q4 Results: Kontoor sees fourth-quarter sales growth of 4% to $699 million, against an estimate of $696.83 million, and an adjusted EPS of $1.38 versus an estimate of $1.33.

Kontoor will release its fourth-quarter results on Tuesday, February 25, 2025.

Price Action: KTB shares are trading lower by 3.43% at $82.80 in premarket at the last check Wednesday.

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