Israel-based lingerie, underwear and activewear manufacturer Delta Galil Industries is to acquire VF Corp's Contemporary Brands businesses in a deal worth $120m.

The agreement includes upscale denim brand 7 For All Mankind, and women's sportswear brands Splendid and Ella Moss – and is projected to add more than US$300m to Delta Galil's top line annual sales. It is also expected to be accretive to Delta Galil's earnings in 2017.

"This transaction reflects our strategic efforts to grow Delta Galil's branded business and expand our global footprint," said Isaac Dabah, CEO of Delta Galil.

"We are thrilled to be adding three renowned premium brands to our portfolio, as they further diversify our product offering and distribution channels, while adding significant strength to our structure.

"We see tremendous opportunity to expand the brands' platform for growth through continued focus on superior quality, design and innovation."

Last year the company significantly increased its capital expenditures to support and drive global growth, adding a factory in Vietnam and a dye house in Egypt, and consolidated its headquarters and invested in new offices and showrooms in New York and Israel.

The brands will join the existing Delta Galil portfolio, which includes PJ Salvage, Schiesser, KN Karen Neuberger, Nearly Nude, LittleMissMatched and Fix.

"We are pleased to have reached this agreement," added VF's chairman and CEO Eric Wiseman. "The brands included in this transaction are leaders in their sectors, and have talented, passionate people who are motivated by serving the marketplace with distinctive apparel design and exceptional service."

Wiseman added that the sale comes after the company earlier this year decided to take a proactive look at its composition "to ensure VF's portfolio is aligned with our strategic objectives and positioned to maximise growth and return to our shareholders."

And in March, the US clothing giant said it was exploring options for its Licensed Sports Group (LSG) business.

VF Corp mulls sale of licensed sports group

UBS Investment Bank analyst Michael Binetti believes the sale "is likely just the first transaction in a larger portfolio transformation for VFC" toward higher growth/higher margin businesses.

He adds: "In our view, selling Contemporary makes strategic sense. While the coalition is just 3% of VFC's total revenue base, Contemporary has been a distraction to management."