Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- Moody’s (NYSE:MCO) Ratings has confirmed that Kontoor Brands (NYSE:KTB), Inc.’s (Kontoor) recent purchase of Helly Hansen will not alter its existing ratings. The ratings in question include its Ba2 corporate family rating, Ba2-PD probability of default rating, and stable outlook.
The acquisition, largely funded by debt, will temporarily affect Kontoor’s credit metrics. However, Kontoor’s commitment to debt reduction and history of conservative leverage are expected to counterbalance this impact. Moody’s predicts that Kontoor will enjoy long-term strategic benefits from the acquisition, while also lowering its Moody’s-adjusted debt/EBITDA from a pro-forma estimated low-4x (below 3x using Kontoor’s net leverage calculation).
Kontoor disclosed on February 19 that it had entered into a definitive agreement to purchase Helly Hansen, an outdoor and workwear apparel brand, from Canadian Tire. The purchase, valued at $900 million, is expected to add roughly $650 million in revenue and $75 million of adjusted EBITDA to Kontoor’s books, alongside an anticipated $15 million of synergies. The acquisition will be financed with $200 million from Kontoor’s balance sheet cash and $700 million of additional debt. The deal, which is subject to regulatory approval and customary closing conditions, is expected to close in Q2 2025.
The acquisition of Helly Hansen is projected to offer long-term growth opportunities for Kontoor. The addition of Helly Hansen will increase Kontoor’s scale and diversify its business, introducing a globally recognized brand in the hiking, skiing, sailing, and workwear categories. Helly Hansen, a Norwegian brand, sees a significant portion of its sales from Europe and is relatively underpenetrated in the US and China. The brand’s significant growth over the past decade suggests further opportunities driven by geographic expansion and the favorable dynamics of the outdoor category.
Kontoor Brands, Inc., based in Greensboro, North Carolina, is a prominent designer, manufacturer, and retailer of denim and other apparel under the Wrangler and Lee brand names. The company reported revenue of approximately $2.6 billion for the fiscal year ending December 30, 2024.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.