Gildan Activewear To Merge With HanesBrands For Enterprise Value Of About $4.4 Bln

Gildan Activewear will acquire HanesBrands in a definitive merger agreement valued at approximately $2.2 billion in equity and $4.4 billion in enterprise value. HanesBrands shareholders will receive 0.102 Gildan shares and $0.80 cash per share, representing a 24% premium and an 87% stock/13% cash consideration, and will own approximately 19.9% of the combined entity. The transaction, backed by $2.3 billion in committed financing and expected to close in late 2025 or early 2026, will see Gildan maintain its Montreal headquarters while reviewing strategic alternatives for HanesBrands Australia. Gildan reaffirmed its 2025 guidance and provided a 2026-2028 outlook projecting 3-5% net sales CAGR and low 20% adjusted EPS CAGR for the combined entity, signaling potential growth and synergy capture.

Analysis

Gildan Activewear is set to acquire HanesBrands in a definitive merger agreement with an enterprise value of approximately $4.4 billion and an equity value of $2.2 billion. The offer for HanesBrands shareholders consists of 0.102 Gildan common shares and $0.80 in cash per share, implying a value of $6.00 per share and representing a 24% premium based on the August 11, 2025 closing price. The deal structure is heavily weighted towards equity, with an 87% stock and 13% cash consideration, resulting in HanesBrands shareholders owning approximately 19.9% of the combined entity, allowing them to participate in anticipated synergies. Strategically, Gildan plans to review alternatives for HanesBrands' Australian operations, signaling a potential divestiture to streamline the portfolio. To facilitate the transaction and refinance approximately $2 billion of HanesBrands' debt, Gildan has secured $2.3 billion in committed financing. While Gildan reaffirmed its 2025 guidance, it issued a strong three-year outlook for the post-merger company (2026-2028), projecting a 3-5% compound annual growth rate (CAGR) in net sales and an ambitious low 20% range for adjusted EPS CAGR, suggesting significant operational efficiency and synergy capture are expected to drive profitability. The transaction is slated to close in late 2025 or early 2026, pending customary HanesBrands shareholder and regulatory approvals.

Key Decisions for Investors

• HanesBrands shareholders should weigh the immediate 24% premium against the long-term value proposition of holding a stake in the combined entity, which forecasts aggressive EPS growth.
• Investors in Gildan should consider the potential for significant EPS accretion, as implied by the low 20% adjusted EPS CAGR target, but must balance this with the execution risk of a large integration and the increased leverage from the new financing.
• The deal's closure is subject to shareholder and regulatory approvals, creating an event-driven risk profile for both stocks that will likely persist until the expected closing in late 2025 or early 2026.
• The strategic review of HanesBrands Australia presents a potential post-merger catalyst, as a sale could accelerate deleveraging and allow management to focus on core integration synergies.