Gildan CEO Glenn Chamandy in Montreal in May, 2024. Gildan will double its annual revenue by taking over HanesBrands.Christinne Muschi/The Canadian Press
Canadian clothing maker Gildan Activewear Inc. GIL-T has finalized its US$2.2-billion takeover of HanesBrands Inc. HBI-N, launching what its chief executive says will be a new era of growth for the two former competitors. Among the first opportunities: better underwear.
The deal, first announced in August, combines two of the world’s biggest producers of basic apparel. Montreal-based Gildan is perhaps best known as a maker of blank, customizable T-shirts and fleece sweatshirts for wholesalers, while U.S.-based Hanes has built its name over a century in underwear and undershirts sold in stores.
Gildan will double its annual revenue by taking over HanesBrands and apply its low-cost manufacturing capability and leading-edge technology to make Hanes’s already strong name recognition and retail reach even stronger, Gildan CEO Glenn Chamandy said. The Canadian company plans to eventually bring the bulk of Hanes’s volumes into its own facilities.
“Consumers today are happy with the Hanes brand. I would say consumers of the future are going to be much happier,” Mr. Chamandy said in an interview Monday, adding that Gildan could introduce better fabrics, better construction and better packaging to Hanes innerwear.
“They’ve got a great name but they’ve probably underinvested in terms of what the consumer is getting for the value of the product,” he said. “That’s the area that we’re going to focus on the most right away … to really innovate and elevate the product portfolio.”
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Men’s underwear in particular is the most brand-loyal category of all apparel, Mr. Chamandy said. “They don’t change underwear very easily. So as you continue to improve it, it makes it more difficult to make that change, ever.”
Stifel analyst Martin Landry estimates the acquisition will be accretive to Gildan’s earnings per share by 18 per cent in the first year before cost-saving synergies and as much as 40 per cent when the company reaches its entire US$200-million synergies target. HanesBrands products are complementary to Gildan’s, and Hanes should increase Gildan’s relevance with its retail partners, he said in a recent note.
HanesBrands, which traces its founding back to 1901, was caught in a standoff with Barington Capital in 2023 after the activist shareholder blasted what it called Hanes’s poor operating performance and excessive debt. An agreement was subsequently reached giving Barington three board seats and an advisory role with the company.
The North Carolina-based apparel company then accelerated a plan to focus on its core brands and sell assets to strengthen its balance sheet. In 2024, it announced a deal to sell the intellectual property and certain operating assets of its Champion clothing business to Authentic Brands Group.
Gildan experienced its own shareholder uprising after its board of directors shocked investors by dismissing Mr. Chamandy in December, 2023, saying they had gradually lost faith in his leadership. U.S. investment firm Browning West LP led a campaign of rebel investors in successfully reinstating him.
The combined company will be a global behemoth, with roughly US$6.9-billion in annual revenue, 91,000 employees and 38 textile and sewing facilities spread across Central America, the Caribbean and Southeast Asia.