Montreal-based Counselor Top 40 supplier Gildan (asi/56842) has secured the purchase of fellow supplier Hanesbrands (asi/59528) for $2.2 billion. The company is valued at about $4.4 billion, including debt, according to a report from The Financial Times.

Upon the news of the potential acquisition, Hanesbrands shares surged 34% on Aug. 12. Gildan’s shares fell 8% in Toronto.

Hanesbrands has been struggling in the retail market as of late, due in large part to tariff impacts, with shares falling 40% since Q1, while Gildan’s earnings released in late July show record numbers. However, the company reported a sales decline of 23.3% in its hosiery/underwear division.

Hanesbrands has also shouldered a heavy debt load that amounted to approximately $2.5 billion in June, and hasn’t turned an annual profit in nearly four years. In the promo space in Q2, Hanesbrands recently reported a 345% increase in operating profit and raised its annual forecast, crediting cost savings measures. Its market value on Aug. 11 was $1.7 billion.

“As part of Gildan, Hanesbrands will benefit from an even stronger financial and operational foundation that will provide new growth opportunities – helping to power further innovation, a broader product offering and greater reach across channels and geographies,” said Hanesbrands Chairman Bill Simon on Aug. 13.

Ballooning debt at Hanesbrands compelled the Winston-Salem, NC-based supplier to off-load assets in recent years, including selling the Champion brand to Authentic Brands last year for $1.2 billion. Activist investor Barington Capital had put pressure on Hanesbrands to dispense with the activewear brand in an effort to shore up sales and decrease costs.

Hanes offers its own brand as well as ComfortWash to the promo industry. Other brands in the company's portfolio include Bonds, Maidenform, Bali and Playtex.

In June, Counselor Top 40 supplier S&S Activewear (asi/84358) became the exclusive provider of Hanesbrands to the promo market, a move the supplier said would expand inventory levels and streamline service for customers. S&S Activewear also just struck a deal with Gildan to become the exclusive wholesale distributor of American Apparel.

With 2024 North American promotional product revenue of $784 million, Gildan ranked third on Counselor’s most recent list of the largest suppliers in the industry.