U.S. undergarment maker Hanesbrands has entered into a licensing agreement with Canada’s Gildan Activewear. This mouthful of a cash-and-stock takeover is worth an astounding $4.4 billion. The settlement represents a significant victory for Hanesbrands. The company has fought a long history of undercapitalization and crippling debt since it spun off from the Sara Lee conglomerate in 2006.
This last quarter, Hanesbrands has faced sales declines in large part due to the competitive pressures in the lucrative athleisure segment. This acquisition occurs as demand for its products has begun to wane. Over the last three years, the company has seen a $195 million annual loss in revenue. This year, its stock has dropped some 40%. Further, Hanesbrands’ share price has lost about 86% of its worth since hitting a peak in April 2015.
The company has focused on cost-reduction strategies and overall supply chain operations have improved, which has increased margins. This has not prevented it from recently being in danger of serious financial woes. After the acquisition announcement was made public, shares of Hanesbrands fell 6% in premarket trading. This decrease followed a meteoric rise of as much as 40% the previous day, which underscored how unsure investors are of what’s to come.
Hanesbrands has gone on a shocking string of acquisitions which have been hit and miss thus far. Accepting Gildan Activewear’s buyout offer would be a major reversal for the company. This initiative is intended to improve operations and regain essential market share.
Gildan Activewear is well–known for its broad selection of blank apparel. They have deep, unparalleled industry knowledge. Through this partnership, they will provide a wealth of resources and market expertise to Hanesbrands. We anticipate that the transaction will close in late 2025 or early 2026. This ambitious timeline is contingent on regulatory approvals and other standard closing conditions.