Ninety-one-year-old Maidenform was a pioneer in the bra industry in the 1920s, patenting the first modern-seamed "uplift" bra in1925. But the Iselin, N.J. has been suffering from losses, hurt by tough competition in the shapewear business and lower sales from department stores, where Maidenform products are traditionally sold.
The company said it has been evaluating its strategic options. Maidenform CEO Maurice Reznik said that the deal was appealing in part because it provides the necessary infrastructure and resources to help grow its business.
Matthew Butlein, president of freshpair.com, an online underwear retailer, said he thought the move was a smart one for Maidenform since the company can use Hanesbrands marketing team to get more exposure for its brands, as well as its Visr service, a self-service wholesale portal that lets smaller boutiques place underwear orders directly instead of dealing with sales reps. Hanesbrands, for its part, will get more youthful lines from Maidenform, since Hanesbrands lines tend to skew older.
Both companies' boards unanimously approved the acquisition, which is expected to close in the fourth quarter. It still needs approval from Maidenform shareholders.
Hanesbrands shares rose $4.15, or 7.8 percent, to $57.51, after earlier reaching a 52-week high of $59.35. Maidenform shares rose $4.31, or 22.6 percent, to $23.40. The stock has traded between $16.50 and $26.37 during the past 52 weeks.
Hanesbrands, based in Winston Salem, N.C., was founded in 1901 as a men's hosiery business. It expanded into men's underwear in 1920 and added women's bras in 1971 when it acquired Bali Brassiere Company.
Hanes has a 14.3 percent share in the underwear market, according to Euromonitor International, behind only L Brands, which owns Victoria's Secret. Maidenform, meanwhile, is the fifth largest player in the market with a 2.5 percent share.
The deal fits into the company's strategy to make acquisitions that will boost earnings. The Maidenform deal is expected to add to earnings within 12 months, with full benefits in three years. It acquired GearCo., which sells licensed logo apparel in college bookstores, in 2010, and acquired TNF Group Pty Ltd., an activewear supplier in Australia, in 2011.