What's Happening?
Gildan Activewear Inc., a Montreal-based company, has agreed to purchase Hanesbrands Inc., a U.S. underwear maker, for approximately $2.2 billion in cash and stock. This acquisition aims to double Gildan's annual sales, with the deal offering Hanesbrands shareholders about $6 per share, representing a 24% premium based on closing prices as of August 11. The transaction, which includes debt, values Hanesbrands at around $4.4 billion, marking Gildan's largest deal to date. The acquisition is expected to close by the end of the first quarter next year, with plans to review the potential sale of HanesBrands Australia business. The deal is part of a series of multibillion-dollar transactions contributing to a busy summer for M&A bankers.
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Why It's Important?
The acquisition of Hanesbrands by Gildan is significant as it positions Gildan to achieve a scale that sets it apart in the apparel industry. The deal is expected to be at least 20% accretive to Gildan's earnings per share and targets synergies of at least $200 million within three years. This move could enhance Gildan's competitive edge and market presence, potentially leading to increased revenue and profitability. The acquisition also reflects broader trends in the industry, where companies are seeking growth through strategic mergers and acquisitions.
What's Next?
Following the acquisition, Gildan plans to integrate Hanesbrands into its operations, with a three-year outlook through 2028 that includes a compound annual growth rate of 3% to 5% in net sales. The company will also consider the sale of HanesBrands Australia business. Stakeholders, including investors and industry analysts, will be closely monitoring the integration process and its impact on Gildan's financial performance.
