A rumour broke this morning that Gildan (GIL) is circling Hanesbrands (HBI) in what would be an opportunistic $5B bid - representing a mid-9s EV/EBITDA multiple, passing the quick and dirty accretion check.

While straying from its focus on organic growth, there’s an obvious strategic rationale for the deal. GIL should be able to drive margin expansion at HBI, and could unlock additional growth from its existing retail distribution.

The timing works too, as an offer would come at a point where HBI has to turned inwards, sacrificing growth and selling off assets to reduce its debt load as it manages through tariff impacts.

The catch? Financing. Gildan’s currently within its leverage target range and with cash on hand, would have roughly $400M to spend before breaching the top end. Either leverage is going higher, or Gildan will issue equity… or both.