Transforming into a major buyer, Gildan Activewear has acquired competitor HanesBrands Inc for $2.2 billion.
According to the Montreal-based company, the deal will create a powerful new entity with a highly efficient manufacturing base and strong brand recognition, leading to significant growth opportunities.
Glenn Chamandy, CEO, says, the combination will create a global leader in basic apparel with access to iconic underwear brands and further strengthen our low-cost, vertically integrated manufacturing network.
This acquisition comes roughly a year and a half after Gildan faced its own leadership crisis, which saw Chamandy ousted and then reinstated in May 2024 after the previous CEO and board resigned. Following his return, company shares saw sharp gains. While they had since fallen this year due to trade and tariff concerns, Gildan's stock climbed more than 10% in midday trading on the Toronto Stock Exchange on Wednesday.
The stock gains occurred despite the company's announcement that it would suspend its share buyback program until its debt-to-earnings ratio improves.
Gildan promises at least $200 million in cost savings through the combined companies’ efficiencies. The company also plans to use its robust manufacturing base to help expand the Hanes brand into activewear, an area where Hanes is currently limited.
The cash-and-stock deal involves Gildan issuing HanesBrands shareholders 0.102 of a Gildan share and $0.80 in cash for each Hanes share. The stock issuance makes up 87 per cent of the deal's value. The terms set HanesBrands’ equity value at $2.2 billion, and Gildan will also assume approximately $2 billion in HanesBrands debt. The deal may also include exploring a potential sale or other strategic alternatives for HanesBrands Australia.
Bill Simon, Chairman, Hanesbrands, says, the deal provides significant and certain value for his company's shareholders, offering both immediate cash and the upside potential of the combined business. As part of Gildan, HanesBrands will benefit from an even stronger financial and operational foundation that will provide new growth opportunities, he adds.
