Q: What are your thoughts about the potential purchase of Hanesbrands from a balance sheet perspective and also from a transformational perspective? Decent decline today...based on your response would you consider the decline an opportune time to invest?
5i Research Answer:
It would be GIL's biggest deal ever, but it has a decent record of prior acquisitions. It makes a lot of sense, and would provide $200M in synergies. We think GIL would do a better job with the company. GIL has always wanted to cover the 'whole body' and this is the next logical step. We think the dip is a buying opportunity, but with such a large transaction we would expect high volatility in GIL shares, so we would take a systematic approach as it may dip still on concern on the deal size. So we would start with a partial buy only.