(Reuters) -HanesBrands said on Wednesday it would sell its sportswear brand Champion to Authentic Brands Group in a deal valued at $1.2 billion, as the company looks to streamline business and focus on its innerwear categories.

Shares of HanesBrands surged 15.6% in premarket trading.

The deal could reach up to $1.5 billion through an additional contingent cash consideration of up to $300 million based on achievement of performance thresholds.

The acquisition of Champion, known for its athletic tops and hoodies, would help Authentic Brands to foray into the fast-growing sportswear business, as customers increasingly look to fill their wardrobes with casual and athleisure clothing that tends to be more comfortable and stylish.

Authentic Brands holds a wide variety of clothing brands, including Aeropostale, Eddie Bauer, Forever 21 and Ted Baker.

HanesBrands said it intends to focus on extending its innerwear category and increase investments across its portfolio of brands including Hanes, Bonds, Maidenform and Bali.

After the closing of the deal, which is expected to be completed in the second half of 2024, HanesBrands will provide certain transition services for Champion, including operating the business in select regions.

The innerwear maker expects net proceeds from the transaction of about $900 million.

(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Shilpi Majumdar)