Shares in underwear firm Hanesbrands (HBI) leapt over 40% today on reports that it was being sized up for a $5 billion takeover by Canadian peer Gildan Activewear (GIL).
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Advanced Stage
According to an article in the Financial Times, the deal talks are at an advanced stage, with an agreed acquisition likely by the end of this week. However, according to people close to the deal the talks are not finalized and could still collapse.
Hanesbrands’ range of brands include Hanes, Bali and Playtex underwear. Its stock has dropped over 40% in the year-to-date and over 16% in the last 12 months.
It has been hit by a drop in consumer confidence as well as inventory reductions at its retail partners given uncertainty over the impact of President Trump’s tariffs.
Golden Gildan
However, HBI recently revealed a 1.8% lift in net sales to $991 million in its second quarter. It also raised its full-year outlook for sales and earnings per share.
Despite this, its debt pile remains significant at around $2.5 billion. It has looked to tackle this over the last few years including the 2024 sale of the Champion clothing label to Authentic Brands for $1.2 billion.
Gildan is best known for making blank, customizable t-shirts, fleeces, socks and underwear. Its shares shed over 8% in pre-market trading, however, the price overall has climbed over 9% this year. This is because its use of U.S. cotton and yarn has left it less exposed to tariffs than rivals who manufacture their clothes or import their materials from abroad.
It recently reported record second quarter sales of $919 million, up 6.5% year-over-year, driven by strong Activewear sales growth of 12%. It also reported a record adjusted diluted EPS of $0.97, reflecting a 31% increase year-over-year.
Is HBI a Good Stock to Buy Now?
On TipRanks, HBI has a Hold consensus based on 1 Buy, 4 Hold and 1 Sell ratings. Its highest price target is $9. HBI stock’s consensus price target is $5.83, implying a 20.70% upside.
