Gildan investor blasts board’s sale process as ‘unintelligent’

By

Bloomberg

Published



Mar 25, 2024

Some major shareholders of Gildan Activewear Inc. are criticizing the sale process the board is conducting, blasting the move as unwise and ill-timed amid a fight over control of the company.

Gildan

The process — which the Canadian clothing manufacturer’s board announced last week after receiving interest from potential buyers — is “unintelligent and irresponsible,” Turtle Creek Asset Management said in a letter to the board Monday.

“Just because an offer has been received does not require the board to seriously entertain it, especially when the company is in the midst of a boardroom battle,” said the Toronto-based firm, which owns 2.6% of Gildan’s shares, according to data compiled by Bloomberg.

Representatives of Montreal-based Gildan declined to comment.

Gildan, the owner of the American Apparel brand, has been in turmoil since the board fired longtime Chief Executive Officer Glenn Chamandy in December. A dissident group of investors that owns about one-third of Gildan’s shares has fought to reinstate Chamandy and has questioned the board’s actions.

“To even a casual market observer, it is so obviously a bad time to initiate a sale process that we have been left stunned in disbelief,” said Turtle Creek, which says Gildan is worth more than $60 per share.

Gildan’s US shares fell 0.1% to $37.39 on Monday in New York.

Cardinal Capital Management Inc., which owns 1.7% of Gildan, said the company should only consider bids starting at $50 per share and that an offer of $60 per share “would make sense.”

“Any decent company is always going to have expressions of interests floating around,” said Evan Mancer, the Winnipeg-based firm’s president and chief investment officer. “So it’s very easy to grab onto one of those and then say that you’ve been approached.”

New York-based private equity firm Sycamore Partners is among the potential buyers for Gildan, Bloomberg has reported. Browning West LP, an activist investor in Gildan, said in a news release last week that a “rumored $42 per share indication from a potential buyer” has been circulating, “which effectively represents no premium.”  

Los Angeles-based Browning West plans to propose a slate of candidates at the company’s annual meeting in May to replace most of the board.

Gildan’s largest shareholder, Jarislowsky Fraser Ltd., hinted last week that a takeover would require a high premium as “the current share price does not reflect the long-term prospects of the company.”

“We strongly believe that the board has initiated a sale process in a desperate attempt to avoid the profound professional embarrassment that will befall the directors once they are voted off the board by Gildan’s shareholders,” Turtle Creek said in its letter.
 

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