Gildan Activewear Inc. has gone from potential takeover target last year to it being the big-time buyer as it snaps up HanesBrands Inc. for US$2.2 billion. Montreal-based Gildan said Wednesday that the deal means the combined company will be outfitted with both an efficient manufacturing base and strong brand recognition that will create more potential for growth.
“Today is a historic moment in Gildan’s journey,” said chief executive Glenn Chamandy on an analyst call to discuss the deal. “The combination will create a global basic apparel leader with access to iconic underwear brands and further strengthen our low cost vertically integrated manufacturing network. And we’ll achieve a scale that distinctly sets us apart.”
Market rallies behind Gildan as CEO’s return and acquisition news drive gains
The deal comes about a year and a half since Gildan was fielding offers from interested buyers as it struggled through a protracted and bitter leadership fight that had seen Chamandy ousted, only to be reinstated in May 2024, as the previous CEO and board of directors resigned. Company shares saw sharp gains after Chamandy came back, and while they had retreated this year under trade and tariff fears, Gildan was climbing Wednesday, up more than 10% in midday trading on the Toronto Stock Exchange.
Shares climbed despite the company also announcing Wednesday that it would suspend its share buyback program until its debt-to-earnings ratio improves.
Gildan targets US$200M in savings and activewear growth with Hanes integration
The gains come as Gildan is promising not only at least US$200 million in cost savings through efficiencies of the combined companies, but also using Gildan’s manufacturing base to help expand the Hanes brand into activewear where it’s currently running short.
“Our manufacturing capabilities, our low-cost model and the investments we made, I think, will enhance and support what’s there for Hanes to really step up to the plate,” said Chamandy. He said Gildan could never approach the brand recognition Hanes already has after decades of spending some US$100 million a year on advertising, during a stretch when Gildan has focused on the manufacturing side. “You have an iconic brand like Hanes and you have a vertically integrated low-cost producer like Gildan, and now that opens up everything in the market for us from all aspects,” he said.
Deal awaits shareholder approval, expected to close late 2025 or early 2026
The cash-and-share deal includes Gildan issuing HanesBrands shareholders 0.102 of a Gildan share and 80 cents US in cash for each Hanes share, with the share issuance making up 87% of the value of the deal. The terms put an equity value of US$2.2 billion on HanesBrands, while Gildan will also take on about US$2 billion in HanesBrands debt. The deal would include looking at a potential sale or other strategic alternatives for HanesBrands Australia.
HanesBrands chair Bill Simon said the deal delivers significant and certain value for the company’s shareholders, both through immediate cash and upside potential of the combined company. “As part of Gildan, HanesBrands will benefit from an even stronger financial and operational foundation that will provide new growth opportunities,” he said on the call.
The transaction is subject to HanesBrands shareholder approval and other customary closing conditions. It is expected to close in late 2025 or early 2026. HanesBrands shareholders will own about 19.9% of Gildan shares on a non-diluted basis once the deal is complete.
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