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Gildan Activewear is buying HanesBrands for $2.2 billion, the two companies said Wednesday.
The deal consists of 87% stock and 13% cash per every HanesBrands share, with the cash portion anticipated to be about $290 million. Gildan will pay for HanesBrands through $2.3 billion in transaction financing, through bridge facility and term loans.
The deal implies a $4.4 billion enterprise value for HanesBrands. Gildan CEO Glenn Chamandy said the combination will double Gildan’s revenue and create “scale that distinctly sets us apart.”
Gildan will maintain its headquarters in Montreal but will have a “strong presence” in Winston-Salem, North Carolina, where HanesBrands is based. In addition, Gildan said it intends to “initiate a review of strategic alternatives for HanesBrands Australia,” which could include a sale or other transaction.
The deal is expected to close in late 2025 or early 2026.
A merger between HanesBrands and Gildan would make sense for both companies, David Swartz, senior equity analyst at Morningstar Research Services, said in a client note.
While HanesBrands is well known and is a share leader in men’s underwear and other categories in North America and Australia, Gildan is strong in domestic printwear but has failed at consumer branding, per Swartz.
The potential combination of Gildan and HanesBrands could raise antitrust concerns, however, since both companies are North American producers of men’s and women’s underwear, hosiery and shirts, Swartz said.
“[HanesBrands and Gildan] share some distribution and wholesale partners, and they both own and operate apparel manufacturing facilities in Central America,” Swartz said. “However, they sell their products through different channels — Hanesbrands mainly sells branded products to consumers through mass stores while Gildan specializes in selling imprintable shirts.”
HanesBrands was able to pay down a significant amount of debt last year by selling Champion, a brand that caused consistent revenue declines for the company. On its most recent earnings call, HanesBrands didn’t release updates on the search for a successor for CEO Steve Bratspies, who is set to step down at the end of the year. Swartz pointed to these things as signs that HanesBrands was eying a potential sale.
Gildan has had its own fair share of challenges. The company’s former board fired Chamandy in late 2023, leading to a monthslong proxy battle and a complete board turnover, resulting in Chamandy’s reinstatement. Chamandy’s interest in a deal with HanesBrands was reportedly a reason for his firing, Bloomberg reported.
“Chamandy has preferred to highlight internal opportunities since his reinstatement, but he apparently sees value in adding Hanesbrands,” Swartz said.
The announcement comes at a time when Gildan has experienced declining underwear and hosiery sales, while HanesBrands is focusing on gaining market share in the category.
Last month, Gildan reported Q2 net sales of $919 million, a 6.5% year-over-year increase, which the company called a record.
Gildan’s activewear segment grew 12% for the period, but its hosiery and underwear category fell about 23%, which Gildan said was due to “lower sales volumes and unfavourable mix, as the category experienced continued broader market weakness.” The company previously attributed the decline to the phasing out of a licensing deal with Under Armour.
The underwear segment represents about 10% of Gildan’s total revenue, per Morningstar.
Meanwhile, HanesBrands’s most recent revenue results came in above expectations at $991 million for the second quarter, a 1.8% increase year over year. However, the company pointed to a slowdown in the intimates market.
HanesBrands has been an independent company since 2006, when the Sara Lee Corporation spun out HanesBrands as its own publicly traded company.
HanesBrands’ nearly 20 years as an independent company have been marked by “excessive debt, underinvestment in its operations, ill-timed share buybacks, and disappointing acquisitions,” Swartz said.
Gildan was founded in 1984. In addition to its namesake brand, it owns Comfort Colors, American Apparel, Goldtoe and Peds.