Canada’s Gildan Activewear has agreed to acquire clothing company HanesBrands for $2.2 billion, but the deal may face antitrust issues as both businesses operate in similar product categories.

Gildan, which owns brands such as Anvil, Gildan and Gold Toe, plans to finance the transaction with a mix of cash and stock. The offer amounts to $6 per share, representing a premium of about 24 per cent to Hanes’ closing price on Monday.

The activewear company plans to remain headquartered in Montreal, but expects the deal to help it establish a “strong presence” in Winston-Salem, North Carolina, where HanesBrands is based.

The firm also intends to initiate a review of strategic alternatives for Hanesbrands Australia, which could include a sale or other transaction, after the deal closes, potentially late this year or early next year.

The proposed merger could, however, bring about antitrust concerns as both companies produce men’s and women’s underwear, hosiery and shirts in North America, Fashion Dive reported, citing an analyst.

While the two companies sell their products through different channels, they share some distribution and wholesale partners and both own apparel manufacturing facilities in Central America, the analyst explained. 

Founded in 1901, HanesBrands’ portfolio includes Hanes, Bonds, Maidenform and Bali among others. The company’s sales fell 3.6 per cent to $3.5 billion for the year ended December 28, while its net loss widened from $17 million to $320 million.

This fiscal, the firm reported a 2.1 per cent uplift in sales for the first quarter and 1.8 per cent increase in the second quarter. It swung to a net income of $72 million during the first half from a loss of $337 million in the year-ago period.

Last year, HanesBrands sold its Champion business to Authentic Brands Group for $1.2 billion.