Hanes and Gildan Merger: Strategic Transformation in the Apparel Industry (HBI, GIL)

Hanesbrands Inc. and Gildan Activewear Inc. have announced a complex, multi-step merger agreement that could reshape the global apparel market. While the deal has been formally proposed and thoroughly detailed, it still hinges on a critical component: shareholder approval. With the Special Meeting scheduled for November 25, 2025, investors are gearing up to cast a pivotal vote. Here’s a deep dive into what this merger entails, its financial mechanics, and what’s at stake for both companies.

Merger Structure: A Four-Step Transaction

The merger agreement signed on August 13, 2025, outlines a layered approach designed for operational efficiency and regulatory compliance. Here’s how the deal is expected to unfold if approved:

1. Hanesbrands Merger: Hanesbrands merges into a wholly owned subsidiary, becoming a subsidiary of Hanesbrands Holdco.

2. LLC Conversion: The newly merged entity converts into a Maryland LLC.

3. First Gildan Merger: Hanesbrands Holdco merges into Gildan’s First Merger Sub.

4. Second Gildan Merger: That entity then merges into Gildan’s Second Merger Sub, completing the consolidation.

The structure enables a seamless transition under Gildan’s corporate umbrella while minimizing legal and tax complications.

Deal Terms: Shareholders' Consideration

If the merger is approved and closes as expected, each share of Hanesbrands common stock will be exchanged for:

• 0.102 Gildan common shares

• $0.80 in cash

This combination of stock and cash consideration is fixed and not subject to adjustment based on market price fluctuations prior to the merger closing. For reference:

• On August 11, 2025, the day before media coverage surfaced, Gildan’s share price was $50.94, giving Hanesbrands stockholders an implied value of $6.00 per share.

• By October 1, 2025, that value had risen to approximately $6.85 due to Gildan’s increased share price of $59.31.

The final value realized by shareholders will depend on Gildan’s market performance at the time of closing.

Shareholder Vote: What’s at Stake

The Special Meeting of Hanesbrands shareholders is set for November 25, 2025. On the ballot:

1. Merger Proposal: To approve the merger and related agreements.

2. Advisory Compensation Proposal: A non-binding vote on executive compensation linked to the merger.

3. Adjournment Proposal: A backup measure to postpone the meeting if more time is needed to secure votes.

The deal cannot proceed unless the Merger Proposal receives shareholder approval.

As of October 11, 2025, there were 349,936,358 shares of Hanesbrands common stock eligible to vote. The company’s board has unanimously recommended voting in favor of all proposals.

What Happens to Equity Awards

In the event of a completed merger, all Hanesbrands equity awards will be converted into equivalent awards under Gildan’s equity structure:

• Stock Options: Converted into Gildan options with adjusted exercise prices.

• Restricted Stock Units (RSUs): Transformed into Gildan RSUs.

• Performance Stock Units (PSUs): Also converted into RSUs, but performance conditions will no longer apply.

The conversion ratio includes a value adjustment formula tied to the cash component of the merger consideration and the average trading price of Gildan shares prior to closing.

Strategic Goals of the Merger

This merger isn’t just a financial transaction. It’s a calculated strategic move by two apparel powerhouses aiming to create operational and market advantages:

• Complementary Strengths: Hanesbrands excels in branded consumer products and retail partnerships, while Gildan leads in blank apparel manufacturing and wholesale distribution.

• Vertical Integration: Gildan’s ownership of its production facilities can help reduce costs and improve margins across Hanesbrands’ product lines.

• Market Expansion: The combined entity could gain a stronger foothold across North America and key international markets.

The companies expect to unlock synergies in manufacturing, sourcing, logistics, and brand portfolio management.

Potential Risks and Uncertainties

Despite the synergy potential, there are meaningful risks:

• Integration Complexity: Combining large international operations could create challenges in systems, culture, and supply chain.

• Market Volatility: Gildan’s share price directly impacts the economic value delivered to Hanesbrands shareholders.

• Regulatory Scrutiny: Although not highlighted as a major concern, deals of this scale often invite regulatory examination.

Furthermore, the deal structure includes a safeguard. If the shares issued in the merger would exceed 24.99% of Gildan’s outstanding shares, adjustments will be made to the share and cash mix to stay within that limit without reducing the overall value to Hanesbrands shareholders.

Looking Ahead

With a shareholder vote just days away, both companies are entering the final stretch of a high-stakes corporate maneuver. If approved, this merger could mark a significant transformation for the global apparel industry, positioning Gildan-Hanesbrands as a formidable integrated competitor.

The outcome of the vote will set the direction for both organizations. Investors and industry analysts will be watching closely.

Frequently Asked Questions (FAQs)

Has the merger closed yet?

No. The deal is still pending shareholder approval at the November 25, 2025 Special Meeting.

What do I get if the merger is approved?

Each Hanesbrands share will convert into 0.102 Gildan shares and $0.80 in cash.

Do I need to do anything with my shares?

No immediate action is required. Your broker or transfer agent will process the exchange if the deal is approved and finalized.

Will Hanesbrands stock stop trading?

Yes, if the merger closes, Hanesbrands shares will be delisted from the NYSE, and Gildan will be the surviving public company.

Are there appraisal rights for Hanesbrands shareholders?

No. Shareholders do not have appraisal rights in this transaction.

What happens if the vote fails?

If the merger proposal isn’t approved, the transaction will not proceed, and Hanesbrands will remain an independent public company.

Financial Disclaimer

This article is for informational purposes only and does not constitute financial, legal, or investment advice. Readers should conduct their own research or consult a qualified financial advisor before making any investment decisions. The author and publisher disclaim any liability for actions taken based on this content.

Hanes Merger HBI GIL

Hanes Merger HBI GIL