Hanes and Playtex Owner Agrees to $4.4 Billion Takeover. Why the Stock Is Down.

Hanesbrands owns brands Playtex, Wonderbra and Hanes. ((Tim Boyle/Getty Images))

Gildan Activewear confirmed it has agreed to buy smaller retailer Hanesbrands in a deal valued at $4.4 billion early Wednesday.

Hanesbrands stock fell 7% to $5.76 in premarket trading. It comes after the stock soared 28% Tuesday on a Financial Times report that Gildan was in advanced talks to buy the company for about $5 billion—$600 million more than the confirmed deal value.

The companies said the deal implies a value of $6 per Hanesbrands share, a 24% premium to Monday’s closing price. However, it’s lower than the $6.18 level the stock closed at on Tuesday.

Shares of Gildan were down 0.7% ahead of the open, following a 3.6% drop Tuesday.

The companies said the acquisition will create a global apparel leader with access to Hanesbrands’ innerwear brands such as Hanes, Playtex and Wonderbra.

“With this transaction, our revenues will double and we achieve a scale that distinctly sets us apart,” said Gildan CEO Glenn Chamandy in a statement.

Write to Elsa Ohlen at elsa.ohlen@barrons.com