Canada’s Gildan Activewear, one of the world’s largest makers of basic apparel, is buying HanesBrands for $2.2 billion in a move to create a clothing powerhouse with more than 40 manufacturing sites worldwide.
Gildan, mainly a wholesale provider of private labels, and HanesBrands, with well-known consumer brands such as its namesake underwear and Maidenform, on Wednesday said they reached a definitive agreement. The deal includes textile-and-sewing hubs and yard-spinning facilities and involves merging supply chains and manufacturing networks.
The headquarters of Gildan will remain in Montreal, and the combined company will maintain a strong presence in Winston-Salem, North Carolina, where HanesBrands is based. It leases about 61,000 square feet for its headquarters at the Park Building at 101 N. Cherry St. The deal is expected to close in late 2025 or early 2026 with an equity value of roughly $2.2 billion and an enterprise value of about $4.4 billion for HanesBrands, they said.
“With this transaction, our revenues will double [to $6.9 billion] and we achieve a scale that distinctly sets us apart,” Glenn Chamandy, Gildan president and CEO, said in a statement. “The combination with HanesBrands strengthens our positioning with an opportunity to expand the heritage 'Hanes’ brand presence in activewear across channels, while enhancing Gildan’s retail reach for its portfolio of brands. Further, our state of the art low-cost vertically integrated platform will be utilized to enhance efficiencies and drive additional innovation.”
The combination will offer “significant manufacturing synergy opportunity,” according to an investor presentation. Gildan expects to see at least $200 million of annual run-rate cost synergies within three years of closing.
The merged company is set to be one of the largest global apparel players by number of units sold, officials told investors.
Gildan and HanesBrands plan to reap the benefits of combining their capabilities, saying it will give them a competitive edge. The combined entity’s supply chain will be enhanced to support major customers; it will be able to optimize its manufacturing across different regions; it can consolidate its global distribution footprint; and it will be the largest domestic consumer of U.S. cotton.
“We’ll achieve a scale that distinctly sets us apart,” Chamandy said on an investor conference call.
Still some risks
The deal isn’t without risks. Manufacturers are still navigating the impact of tariffs on imports, although many of Gildan and HanesBrands factories are not in Southeast Asia, which faces heavy fees. HaneBrands has been seeing its sales slip in recent years. And Gildan has seen internal upheaval. But both companies touted the potential upside of the deal.
“As part of Gildan, HanesBrands will benefit from an even stronger financial and operational foundation that will provide new growth opportunities — helping to power further innovation, a broader product offering and greater reach across channels and geographies,” Bill Simon, HanesBrands chairman, said in a statement.
HanesBrands’ biggest distribution center is in Perris, California, where it leases a 1.3 million-square-foot facility at 3700 Indian Ave., according to CoStar data.
HanesBrands once had a brick-and-mortar retail portfolio. But a year ago, it sold operations for its Hanes Outlet and Maidenform stores to Hilco Consumer-Retail based in Hoffman Estates, Illinois.
“I don’t see many immediate changes for HanesBrands as the group has already undertaken some streamlining, including disposing of the outlets business to Hilco,” Neil Saunders, a retail analyst and managing director at analytics firm GlobalData, said in an email to CoStar News. “Initially, Gildan will focus more on back-end efficiencies and creating sensile integrations between the two businesses where possible. Wholesale will continue to be the main focus and Gildan will likely look to drive up the sales activity in this arena.”
Gildan and HanesBrands didn’t immediately respond to an email from CoStar News seeking comment.
Tariff opportunity?
Company officials were asked if the merger gives them the chance to take market share from some manufacturers in Southeast Asia, which face high tariffs.
“Today, if you look at the manufacturing footprint [of Gildan and HanesBrands] and we’re exactly aligned together,” Chamandy said. “We have basically the bulk of our production in Central America and the Caribbean as well as some production in Asia. So we think that we’re really well aligned to take advantage actually of this near-short opportunity.”
Gildan will be “really consolidating distribution footprints, optimizing logistics, IT infrastructure,” according to Chamandy.
HanesBrands reported second-quarter earnings last week and saw U.S. net sales dip 0.6%, to $735.5 million, compared with the prior year. In July, Gildan said it had record net sales of $919 million in the second quarter, up 6.5% compared with the previous year. But the company has seen past upheaval.
Chamandy was ousted in December 2023. Following a proxy battle, however, he was reinstated in May 2024. Chamandy’s desire to do a deal with HanesBrands led to his firing, according to Bloomberg.
Under the terms of the merger agreement, HanesBrands shareholders will receive 0.102 common shares of Gildan and 80 cents in cash for each share of HanesBrands common stock. Based on the closing price of Gildan and HanesBrands’ common stock on Monday, the offer implies a value of $6 per HanesBrands share, representing a premium of about 24% to HanesBrands closing price on that data.
The cash portion of the acquisition is expected to be roughly $290 million. Gildan plans to refinance HanesBrands’ revolving credit facility, term loans, unsecured notes and short-term debt totaling about $2 billion in aggregate.
In connection with the deal, Gildan has obtained $2.3 billion of committed transaction financing, comprising a $1.2 billion bridge facility and term loans in the aggregate amount of $1.1 billion. The bridge facility provides financing to backstop an anticipated issuance of new debt securities prior to closing of the acquisition.
For the record
Morgan Stanley & Co. and CIBC Capital Markets acted as financial advisers to Gildan. Morgan Stanley Senior Funding and Canadian Imperial Bank of Commerce provided fully committed financing. Sullivan & Cromwell and Stikeman Elliott are serving as Gildan’s legal advisers. Goldman Sachs acted as lead financial adviser to HanesBrands. Evercore also acted as a financial adviser to Hanesbrands, and Jones Day and Blake, Cassels & Graydon are serving as its legal advisers.