Amid months of messy leadership drama at Gildan Activewear (PPAI 250187, Platinum) – PPAI 100’s No. 38 supplier – the company’s board of directors has confirmed that an offer has been made to acquire the Montreal-headquartered apparel company.
- Gildan’s statement characterizes the offer as “a confidential non-binding expression of interest” to acquire the company.
- The board also confirmed that it is considering this offer as well as other potential offers.
- Trading of Gildan’s stock has been halted on the New York and Toronto stock exchanges. Prior to the halt, its stock was up 10% on the New York exchange.
This development has been decried by Browning West, an activist fund that owns about 5% of Gildan. The fund recently sued the Gildan board and demanded that it hold its annual meeting without delay.
- Amid the lawsuit and Browning West’s many grievances with Gildan – some of which are supported by Gildan’s largest shareholder Jarislowsky Fraser – Browning West says that the Gildan board “cannot be trusted” to oversee a potential sale of the company.
Will Gildan Be Sold?
Gildan’s board has been careful to use language to avoid claiming any specific action will be taken, noting that the their forward-looking statements were “inherently uncertain.” It has established a committee of independent directors “to review and consider the merits of the proposal.”
Speaking to Reuters, Gildan Spokesperson Simon Beauchemin, says, “The special committee determined that it was consistent with its fiduciary duties and in the best interests of Gildan to contact other potential bidders with a view to maximizing the value of any potential transaction.”
- Beauchemin says that the special committee, working with the company’s financial advisors, have been in contact with potential buyers and that interest has been shown in a possible friendly takeover of Gildan.
While Gildan’s statements have called the original acquisition offer “confidential,” media reports have claimed that Sycamore Partners, a private equity firm and parent company of PPAI 100 No. 3 distributor Staples Promotional Products, is exploring a bid for Gildan.
A Fiery Saga
The dramatic developments involving Gildan leading up to a potential sale have stacked up in the previous months. A non-exhaustive timeline of events is as follows:
- In December of 2023, the Gildan board ousted Glenn J. Chamandy as CEO after it claimed to have lost confidence in him. It replaced him with former alphabroder CEO Vince Tyra.
- Browning West publicly called out the Gildan board and requested a special meeting to reinstate Chamandy.
- In January, the Gildan board issued an open letter to shareholders regarding Chamandy’s termination, claiming he was “disengaged,” had “no vision for the future” and accused him of focusing on outside personal pursuits.
- That same month, the board claimed that Browning West’s purchase of Gildan shares was illegal, having violated U.S. antitrust laws, which Browning West denied.
- Earlier this month, Browning West sued Gildan Activewear and demanded an annual meeting scheduled for May 28 not be delayed. Gildan’s board was also accuses of failing to perform due diligence before hiring Tyra, who allegedly had an affair with an employee who reported directly to him while he was CEO of alphabroder more than two decades ago – and who now holds a senior leadership position at Gildan.
