Gildan Completes HanesBrands Acquisition, Shifting Focus to Integration Execution

What happened

Gildan Activewear has finalized its acquisition of HanesBrands, a transaction previously announced and detailed in an August 2025 material change report, moving from pending to completed status. This deal aims to create a global apparel leader by merging Gildan's vertically integrated, cost-efficient manufacturing with HanesBrands' established retail brands and distribution channels. According to the DeepValue master report, the acquisition targets over $200 million in run-rate synergies within three years, a central pillar of the BUY recommendation based on Gildan's solid free cash flow and growth in Activewear. However, the report critically notes significant risks including integration complexity, trade policy volatility like Section 301 tariffs, and increased leverage that could pressure the balance sheet. With the deal now closed, investors must pivot from regulatory approval concerns to monitoring Gildan's ability to deliver on these ambitious synergy targets while navigating ongoing headwinds.

Implication

The completion of the acquisition eliminates regulatory uncertainty but heightens execution risk, requiring close tracking of early synergy milestones and cost savings to validate the deal's rationale. Gildan's guided free cash flow over $450 million offers a buffer, yet near-term leverage increase could strain the balance sheet if synergies are delayed or overstated. Persistent risks from the master report, such as UFLPA enforcement and tariff shifts, remain threats that could erode margins and complicate integration efforts. Success in merging operations could enhance retail access and procurement efficiency, potentially driving long-term growth and margin expansion beyond current guidance. Conversely, failure to achieve targeted synergies or mismanagement of integration might prompt a downgrade from BUY to a more cautious stance, underscoring the need for disciplined capital allocation.

Thesis delta

The acquisition's completion shifts the investment thesis from contingent upside on approval to active execution risk, with the BUY stance now hinging on Gildan's ability to deliver promised synergies and manage integration challenges. Core drivers like cost leadership and free cash flow generation remain intact, but investors must prioritize monitoring synergy cadence and de-leveraging progress over the next 12-24 months.