Gildan to acquire HanesBrands in $4.4 billion deal

MONTREAL/WINSTON-SALEM - Gildan Activewear Inc. (NYSE:GIL), a profitable apparel manufacturer with a market capitalization of $7.3 billion and strong financial health according to InvestingPro metrics, has entered into a definitive merger agreement to acquire HanesBrands Inc. (NYSE:HBI) in a transaction valued at approximately $4.4 billion, the companies announced Wednesday.

Under the terms of the agreement, HanesBrands shareholders will receive 0.102 common shares of Gildan and $0.80 in cash for each share of HanesBrands common stock, representing a premium of approximately 24% to HanesBrands’ closing price on August 11. Gildan, currently trading at a low P/E ratio of 15.5x relative to its near-term earnings growth, appears slightly undervalued according to InvestingPro’s Fair Value analysis.

The combined entity will create what the companies describe as a global basic apparel leader with a strengthened low-cost vertically integrated manufacturing network. With Gildan’s strong financial health score and current ratio of 3.87x, indicating robust liquidity, the company expects to realize at least $200 million in annual run-rate cost synergies within three years of closing.

"Today is a historic moment in Gildan’s journey as we look to join forces with HanesBrands," said Glenn J. Chamandy, President and CEO of Gildan. "With this transaction, our revenues will double and we achieve a scale that distinctly sets us apart."

The acquisition is expected to be immediately accretive to Gildan’s adjusted diluted earnings per share, with the company projecting 20% or greater accretion once the full synergies are realized.

Following the transaction, HanesBrands shareholders will own approximately 19.9% of Gildan shares on a non-diluted basis. Gildan intends to maintain a strong presence in Winston-Salem, North Carolina, where HanesBrands is headquartered, while keeping its own headquarters in Montreal.

The deal is subject to HanesBrands shareholder approval and regulatory clearances, with closing expected in late 2025 or early 2026. Gildan plans to refinance approximately $2 billion of HanesBrands’ existing debt and has secured $2.3 billion in committed transaction financing. For detailed analysis of this significant transaction and access to over 10 additional ProTips about Gildan’s financial position, visit InvestingPro, where you’ll find comprehensive research reports and expert insights.

Gildan is reaffirming its full-year 2025 revenue and earnings guidance while projecting an adjusted diluted EPS compound annual growth rate in the low 20% range for 2026-2028, assuming the transaction closes.

The announcement is based on a press release statement from both companies.

In other recent news, Gildan Activewear reported strong second-quarter earnings, with normalized earnings per share of $0.97, up from $0.74 in the same period last year, surpassing consensus estimates by $0.01. The company also achieved revenue of $919 million, exceeding estimates by $13 million and improving from $862 million in the prior-year quarter. Following these results, CFRA raised its price target for Gildan to C$76.00, while maintaining a Hold rating. Barclays also adjusted its price target to $56.00, citing the company’s performance as slightly exceeding market expectations.

Additionally, RBC Capital initiated coverage of Gildan Activewear with an Outperform rating and a price target of $61.00, highlighting the company’s strong execution across its operations. Scotiabank reinstated coverage with a Sector Outperform rating and a price target of $55.00, noting Gildan’s high margins and efficient supply chain. Analyst John Zamparo from Scotiabank mentioned that despite industry challenges, Gildan’s low-cost structure and strategic supply chain position it well for capturing market share. These developments reflect the investment community’s positive outlook on Gildan Activewear amid a challenging market environment.

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