S&P Global Ratings placed Hanesbrands’ debt ratings on CreditWatch positive because it believes Hanesbrands’ credit profile will improve following its acquisition by Gildan.
S&P also noted it could withdraw the ratings on Hanesbrands depending on how Gildan addresses Hanesbrands’ existing debt.
On Wednesday, U.S.-based Hanesbrands Inc. announced that it had entered into a definitive agreement to be acquired by Canada-based basic apparel manufacturer Gildan Activewear Inc. The total enterprise value of the deal is $4.4 billion, which represents an acquisition multiple of 8.9x. The combined company will have pro-forma net sales of $6.9 billion and EBITDA of $1.5 billion for the 12 months ended June 29, 2025.
S&P said, “We anticipate the transaction will close in late 2025 or early 2026. The merger agreement has been unanimously approved by the boards of directors of both Gildan and Hanesbrands. That said, the transaction remains subject to the approval of Hanesbrands’ shareholders and the fulfillment of other customary closing conditions, including regulatory approvals. Gildan has obtained $2.3 billion of committed transaction financing in connection with the acquisition, which comprises a $1.2 billion bridge facility and term loans with an aggregate value of $1.1 billion.
“Hanesbrands posted strong results during its second quarter ended June 28, 2025, including improvements in its sales, gross margin, and operating profit. The company also raised its full-year 2025 outlook for its net sales, operating profit, and earnings per share. Hanesbrands reduced its leverage to 4.9x for the 12-months ended June 28, 2025, from the mid-7x area the previous year. This was from items including cost savings, tariff mitigation efforts, and rising demand in basics, active, and new businesses following the sale of Champion in 2024.
“The proposed transaction will combine Gildan’s vertically integrated manufacturing capabilities with Hanesbrands’ brand and retail capabilities to create a leading low-cost apparel manufacturer. We believe the combined entity will have a differentiated and well-diversified business across products and channels. Moreover, we expect the transaction will enable Gildan to further establish a flexible manufacturing footprint, allowing it to efficiently manage any potential tariff impacts. We also expect the tie-up to support the realization of potential synergy opportunities, including cost savings. Gildan has identified at least $200 million of expected annual run-rate cost synergies across its supply chain, operations, and selling, general, and administrative expenses that it expects to realize in the three years following the acquisition.
“We will resolve the CreditWatch upon the completion of the acquisition. At that time, we will likely upgrade Hanesbrands or withdraw our ratings, depending on its post-transaction capital and organizational structure.”
