Workflow
Will Gildan's HanesBrands Deal Create a Global Apparel Powerhouse?
ZACKSยท2025-08-14 17:06

Core Viewpoint - Gildan Activewear Inc. is acquiring HanesBrands Inc. in a deal valued at approximately $2.2 billion in equity and $4.4 billion in enterprise value, aiming to create one of the largest players in basic apparel [1][8] Group 1: Transaction Details - The merger will provide HanesBrands shareholders with 0.102 Gildan shares and $0.80 in cash per share, valuing HanesBrands stock at $6.00, which is a 24% premium to its closing price on August 11 [1] - The transaction has been unanimously approved by both companies' boards and is expected to close in late 2025 or early 2026 [2] Group 2: Financial Projections - The combined company is projected to have pro forma annual revenues of $6,883 million and adjusted EBITDA of $1,553.8 million, including $200 million in anticipated annual cost synergies to be realized within three years [2][8] - Gildan expects immediate accretion to adjusted earnings per share (EPS), with more than 20% accretion once synergies are factored in [2] Group 3: Strategic Benefits - The merger will enhance scale and market positioning, improving go-to-market capabilities and product diversification [3] - Gildan's low-cost vertically integrated production model will be utilized to optimize HanesBrands' operations and expand brand presence in activewear [3] Group 4: Financing and Debt Management - Gildan has arranged $2.3 billion in committed funding for the acquisition, consisting of a $1.2 billion bridge facility and $1.1 billion in term loans [4] - Following the deal's completion, Gildan expects its net debt leverage to be around 2.6x adjusted EBITDA, with plans to reduce this ratio to 2.0x or less within 12-18 months post-closing [5] Group 5: Future Outlook - Gildan has reaffirmed its full-year 2025 revenue and EPS targets, expecting net sales growth at a CAGR of 3-5% and adjusted EPS growth in the low-20% range from 2026 to 2028 [6]