What Happened?
Shares of clothing company Hanesbrands (NYSE: HBI) jumped 37.5% in the morning session after reports that it is in advanced talks to be acquired by Canadian apparel company Gildan Activewear (NYSE: GIL).
According to a Financial Times report, the potential deal could value Hanesbrands at nearly $5 billion, including debt. This valuation represents a significant premium over the company's market capitalization of approximately $1.71 billion at the previous day's close. Sources cited in the report indicated that talks are at an advanced stage and a deal could potentially be finalized by the end of the week, though they also cautioned that negotiations are not yet complete and could still fall apart.
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What Is The Market Telling Us
Hanesbrands’s shares are quite volatile and have had 16 moves greater than 5% over the last year. But moves this big are rare even for Hanesbrands and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 14 days ago when the stock dropped 4.2% on the news that the latest U.S. consumer confidence report revealed underlying weakness despite a headline increase, raising concerns about future spending. While the Conference Board's headline Consumer Confidence Index rose to 97.2 in July, the details painted a more cautious picture for investors. The Present Situation Index, a measure of consumers' assessment of current business and labor market conditions, actually fell. More telling for the sector, the report showed a decline in buying intentions for major discretionary items such as homes, cars, and most appliances. This combination of factors signals potential weakness in future consumer spending, casting a shadow over companies that rely on non-essential purchases.
Hanesbrands is down 24.1% since the beginning of the year, and at $6.10 per share, it is trading 31.6% below its 52-week high of $8.91 from December 2024. Investors who bought $1,000 worth of Hanesbrands’s shares 5 years ago would now be looking at an investment worth $381.65.
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