Shareholders slam Gildan's sale strategy as misguided amid a company control battle
Major shareholders of Gildan Activewear Inc., including Turtle Creek Asset Management, are voicing strong objections to the board's decision to entertain sale offers, labeling the process as “unintelligent and irresponsible.”
This criticism arises amidst an ongoing conflict over control of the Canadian apparel company. Turtle Creek, holding a 2.6 percent share in Gildan, expressed concern over the timing of the sale process, especially given the current internal disputes.
Gildan, known for owning the American Apparel brand, has faced leadership challenges, notably with the firing of its longtime CEO Glenn Chamandy in December, as reported by Financial Post.
A group of dissident investors, controlling about one-third of the company's shares, has been advocating for Chamandy's reinstatement and challenging the board's decisions.
Turtle Creek has publicly stated their disbelief at the board's decision to initiate a sale process now, estimating Gildan's value at over $60 per share, while its shares recently dipped slightly to $37.39 in New York.
Another significant shareholder, Cardinal Capital Management Inc., with a 1.7 percent stake, suggests that Gildan should consider bids starting at $50 per share, believing a $60 per share offer would be reasonable.
Evan Mancer, president, and chief investment officer of the Winnipeg-based firm, remarked on the frequency of interest expressions in any reputable company, cautioning against hastily pursuing them.
Potential buyers, including New York-based Sycamore Partners, have shown interest in Gildan.
Meanwhile, Browning West LP, an activist investor, criticized the rumored $42 per share offer from a potential buyer as negligible, planning to nominate its own candidates for most of the board positions at the upcoming annual meeting.
Jarislowsky Fraser Ltd., Gildan's largest shareholder, last week indicated that any takeover should command a substantial premium, reflecting the company's long-term potential.
Turtle Creek's letter to the board conveyed a strong belief that the sale process is a strategic move to preclude the anticipated removal of directors by shareholders, highlighting the tension surrounding the company's governance and future direction.
