The deal involves an initial transaction sum of $750m and a performance-based earnout of $250m, which will be delivered in the coming years depending on Lee’s performance under its new ownership.
The transaction has received unanimous approval from Kontoor’s Board of Directors and remains subject to standard regulatory approvals and customary closing conditions. It is expected to be finalised in the second half of 2026.
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The agreement comes after Kontoor Brands initiated a competitive process to divest Lee Jeans in the first quarter (Q1) of 2026 and as the Lee brand’s revenue stood at $750m, a decrease of 5% in FY25.
With this move, Kontoor Brands hopes to narrow its portfolio, allowing it focus on its Wrangler and Helly Hansen brands.
Kontoor president, chief executive officer and board chairman Scott Baxter said: “The Lee transaction is a deliberate step to sharpen our brand portfolio and unlock investment capacity to fuel accelerated growth for the future of Kontoor. By increasing our focus on Wrangler and Helly Hansen, two iconic brands with significant white space opportunities, we are better positioned to fuel a higher growth profile and create even greater value for our shareholders.”
Kontoor also aims to strengthen investment in what it considers higher-performing brands and streamline its resources.
The company stated that the move will further concentrate capital and efforts behind its denim, outdoor, and workwear categories.
A portion of the proceeds from the Lee sale will be used for share repurchases under a $750m authorisation and voluntary repayment of term loans. Kontoor expects the transaction to improve its balance sheet and provide increased flexibility for organic growth opportunities.
With the sale, Kontoor’s business profile is set to shift towards segments with structural growth, especially in its denim and outdoor lines.
The company indicated that this transition is designed to enhance long-term profitability and solidify its commitment to delivering value to shareholders.
Regulatory review processes and the completion of standard closing steps are underway and will determine the finalisation of the transaction, Kontoor added.
Last year, Authentic Brands acquired Dockers from Levi Strauss & Co, in a $311m deal. Recent rumours have suggested the group is interested in acquiring the struggling Converse brand from Nike.
