HanesBrands Inc. (HBI) stock experienced a pre-market plunge of 5.34% on Wednesday, despite the announcement of a merger agreement with Gildan Activewear. The unexpected drop comes as Gildan agreed to acquire HanesBrands in a deal that values the US underwear maker at approximately $2.2 billion in equity value and $4.4 billion in enterprise value.

According to the terms of the agreement, HanesBrands shareholders will receive 0.102 Gildan shares and $0.80 in cash for each HanesBrands share. This offer implies a value of $6.00 per HanesBrands share, representing a 24% premium to the company's recent stock price. Upon completion of the transaction, HanesBrands shareholders will own approximately 19.9% of Gildan's outstanding shares.

The market's negative reaction to the news may stem from various factors, including concerns about the deal's structure, potential regulatory hurdles, or the combined company's future prospects. Gildan expects to achieve $200 million in annual cost synergies within three years of the merger, which could be viewed as ambitious by some investors. Additionally, Gildan has reaffirmed its full-year 2025 revenue and EPS guidance, projecting a compound annual growth rate of 3-5% for net sales in the 2026-2028 period. The pre-market plunge suggests that some investors may be skeptical about the long-term value creation potential of this merger or are reacting to the cash component of the deal being lower than expected.