Swedish underwear business Björn Borg has acquired its Benelux distributor Baseline Group for EUR1.25m (US$1.3m) as it continues to accelerate the vertical integration of its operations and reposition as a sports fashion brand.

Baseline is responsible for distributing Björn Borg underwear and sports apparel products in the Netherlands and Belgium, as well as retail operations of 12 Björn Borg concept and outlet stores in these countries. The business also involves logistics for the local market.

The group has a total of 90 employees and a turnover in 2015 for the Björn Borg brand of EUR23.3m (US$24.7m), but incurred an earnings before interest and tax (EBIT) loss of EUR0.7m.

Its distribution deal for Benelux was terminated last December 2015, with a four-year term of notice set to December 2019 unless an earlier takeover was agreed.

The Benelux region is the largest market for Björn Borg, ahead of Sweden, accounting for 26% of total brand sales in 2015. It is also the market where the brand has by far the firmest foothold in sports apparel products, which is a key strategic product category going forward.

"I am happy to announce this step for the vertical integration of our business and for getting a stronger hold of the sportswear business," says Henrik Bunge, CEO of Björn Borg.

"Through the acquisition of the Benelux operations, we increase the potential that we see in this important market and are able to secure the continuity of business by building on the platform that is already in place.

"We see this as an important investment for future growth, and with the right timing since 2017 is our first year without earn-out payments to the former owner of the Björn Borg brand, which increases our financial capacity for an offensive step like this."

As well as paying EUR1.25m for all shares and shareholders' loans in the Baseline Group over a three-year period, the transaction will also see Björn Borg take over working capital financing from local banks of up to EUR2.8m.

The deal, which will take place on 2 January 2017, is expected to increase annual net sales by SEK100m.