Gildan to Buy Underwear Maker Hanesbrands for $2.2 Billion

Gildan Activewear Inc. agreed to buy US underwear maker Hanesbrands Inc. — aiming to double its annual sales — for about $2.2 billion in cash and stock.

Montreal-based Gildan is offering Hanesbrands holders roughly $6 a share, based on the companies’ closing prices on Aug. 11, representing a premium of about 24 percent to the closing price on that date, according to a statement Wednesday. Including debt, the company’s largest deal ever values Hanesbrands at about $4.4 billion.

“With this transaction, our revenues will double and we achieve a scale that distinctly sets us apart,” Gildan’s chief executive officer Glenn Chamandy said in the press release.

Analysts expect Gildan’s annual revenue to rise about 5 percent to $3.4 billion this year. Meanwhile, Wall Street projections call for Hanesbrands to increase sales less than 1 percent to $3.5 billion in the same period.

Shares in Hanesbrands slid 4 percent in premarket trading, after gaining 28 percent on Tuesday following reports on the deal.

The transaction targets synergies of at least $200 million within three years, according to the statement, and to be at least 20 percent accretive to Gildan’s earnings per share.

The transaction is expected to close before the end of next year’s first quarter. At that point, Gildan will review the potential sale of the HanesBrands Australia business.

The deal adds to a flurry of multibillion-dollar transactions that are helping to make this summer one of the busiest ever for M&A bankers. At the current run-rate, global deal values could hit $1 trillion in the third quarter for only the second time on record, data compiled by Bloomberg show.

A potential acquisition of Hanesbrands had been among the points of contention in 2023 between Chamandy and the company’s board. Chamandy was ousted over concerns that Gildan would accumulate too much debt, putting the company in jeopardy. He was ultimately reinstated to his role and won a high-profile proxy fight with shareholder backing.

Gildan reaffirmed its annual revenue and earnings per share guidance in the acquisition announcement. It also announced a three-year outlook through 2028, which includes integrating Hanesbrands, that calls for net sales to gain at a compound annual rate of 3 percent to 5 percent.

By Anthony Palazzo

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