Amid Activist Fight, Gildan Activewear Is Now Up For Sale
Gildan Activewear Inc. has several potential “friendly” buyers expressing interest in the company.
The discussions are serious enough that the American Apparel owner said on Tuesday that it has set up a Special Committee of independent board directors to review and consider the merits of a “confidential nonbinding expression of interest to acquire Gildan.” Gildan said the Special Committee will also review other options, “including maintaining the status quo and continuing to execute on Gildan’s existing business plan.”
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Gildan also said that after consultation with legal and financial advisors, the Special Committee determined that it was in the best interests of Gildan to reach out to other potential bidders to maximize the value of any potential transaction for shareholders, as well as consistency with the requisite fiduciary responsibilities. Gildan said the outreach by the Special Committee, with the assistance of its financial advisors, has already resulted in expressions of “interest in considering a potential friendly transaction with Gildan.”
The underwear and T-shirts manufacturer cautioned that there “can be no assurance [that] any transaction will result from these discussions.”
The battle between Gildan and its activist investor Browning West began in December when the apparel manufacturer dismissed founder and former long-time CEO Glenn Chamandy. Browning West, which has the support of eight other investors—Turtle Creek Asset Management, Jarislowsky Fraser Ltd., Cooke & Bieler LP, Pzena Investment Management, LLC, Janus Henderson, Anson Funds Management LP and Anson Advisors Inc., Oakcliff Capital and Cardinal Capital Management—is seeking board change. The investors together control 35 percent of Gildan’s outstanding shares. Their aim is the ouster of Vince Tyra and the reinstatement of Chamandy.
Tyra was named president and CEO, and was set to begin on Feb. 12. Because of the brouhaha, he began his tenure in January, one month earlier than originally planned to bring stability and leadership to the company.
Gildan last month posted an 82.7 percent jump in fourth-quarter net income to $153.3 million, or 89 cents a diluted share, on an 8.7 percent increase in net sales to $782.7 million. For the year ended Dec. 31, 2023, net income slipped 1.5 percent to $533.6 million, or $3.03 a diluted share, on a net sales decline of 1.4 percent to $3.2 billion. Adjusted diluted earnings per share were 75 cents in the quarter and $2.57 for the year.
During the company conference call on earnings, Tyra said the company’s “DNA is to be a low-cost producer.” He also spoke about growth opportunities for the company with ring spun and fleece.
But with a proxy battle taking center stage, there’s no clear view on the company’s future and that won’t be certain until one know where leadership lies, Tyra or the reinstatement of Chamandy. Gildan’s annual meeting of shareholders is set for May 28.
Shares of Gildan traded up more than 10 percent following the news.
