Shares of Hanesbrands Inc. (HBI) surged 5.58% on Wednesday following the announcement of a definitive merger agreement with Canadian apparel maker Gildan Activewear Inc. The deal, which values Hanesbrands at approximately $4.4 billion including debt, marks a significant consolidation in the global basic apparel industry.
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. This implies a value of $6.00 per Hanesbrands share, representing a premium of approximately 24% to the company's closing price on August 11, 2025. Upon completion of the transaction, Hanesbrands shareholders will own approximately 19.9% of Gildan shares on a non-diluted basis.
The combined entity is poised to become a global leader in basic apparel, with Gildan expecting to double its revenues and achieve significant cost synergies. Glenn J. Chamandy, President and CEO of Gildan, stated, "With this transaction, our revenues will double and we achieve a scale that distinctly sets us apart." The company anticipates realizing at least $200 million in annual run-rate cost synergies within three years of closing.
Market reaction to the deal has been positive, with analysts viewing the combination as strategically sound. Wells Fargo raised its target price for Hanesbrands from $4 to $5, reflecting improved prospects for the company under new ownership. The transaction is expected to be immediately accretive to Gildan's adjusted diluted earnings per share.
Looking ahead, Gildan has provided a three-year outlook for 2026-2028, projecting net sales growth at a compound annual growth rate of 3-5% and adjusted diluted EPS CAGR in the low 20% range. The company also plans to maintain Hanesbrands' strong presence in Winston-Salem, North Carolina, while initiating a strategic review of Hanesbrands' Australian business.
The merger, which is subject to Hanesbrands shareholder approval and regulatory clearances, is anticipated to close in late 2025 or early 2026. This transformative deal represents a new chapter for both companies in the competitive landscape of the global apparel industry.