Hanes Up ~10% On Acquisition Announcement

Hanesbrands HBI shares are shooting higher Wednesday after the company announced it would acquire DB Apparel.

The market’s reaction indicates that investors expect massive synergies between Hanes and the top market shareholder in France, Germany, Spain and Italy.

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DB Apparel will be acquired for $550 million, roughly 7.5 times EBITDA. However, cost saving synergies should take the acquisition cost below four times EBITDA.

Hanes expects $0.25 of earnings to be added to each share in 2015 and $1 annually once full benefits are realized. This compares to TTM EPS of $3.81.

Shares of Hanes were last trading at $96.52, up 8.02 percent on the day.