Dive Brief:
- Gildan Activewear has formed a special committee after receiving a “confidential non-binding expression of interest to acquire Gildan,” according to a press release Tuesday.
- The company’s board said it formed the committee of independent directors to consider the proposal as well as “any alternative transaction,” which could include sticking with Gildan’s existing business plan.
- Gildan noted that the committee, along with legal and financial advisers, contacted a small number of potential bidders “with a view to maximizing the value of any potential transaction,” and several of these potential bidders expressed interest in entering a transaction with Gildan.
Dive Insight:
Gildan noted in its release that there was no assurance that any transaction will result from these discussions.
Gildan’s press release followed separate reports from Bloomberg and Canada-based newspaper Globe and Mail that said private equity firm Sycamore Partners was exploring an offer to buy Gildan. Sycamore declined to comment for Fashion Dive, and Gildan didn’t identify the interested buyer.
Rumored buyer Sycamore would be a “legitimate buyer” for Gildan, David Swartz, senior equity analyst at Morningstar Research Services, said in an email to Fashion Dive. Sycamore has been involved in many retail-related buyouts, Swartz said, including Lowe’s in Canada and Chico’s.
The reports caused “a sudden jump of about 10% in Gildan’s shares” before trading closed on the New York and Toronto exchanges Tuesday, per an stock analyst note from Swartz.
The possible buyer news comes as Gildan’s board and one of its largest shareholders, Browning West LP, are in the midst of a proxy battle. In December 2023, Gildan fired its founder and CEO Glenn Chamandy, which Chamandy said was without cause. That ousting led to shareholder calls to reinstate Chamandy and elect new directors to its board.
“Given that this situation is far from being resolved, a sale of the company at a favorable price could be the best possible conclusion for everyone,” Swartz said in the note Tuesday. “On the other hand, a failed sales process could embolden the dissident shareholders to become even more hostile toward the current board.”
Browning West released a statement Wednesday about Gildan considering a sale. Browning West called the move “reactionary” and said that “a meaningful reconstitution of the Board is immediately required, even before the Annual Meeting in May.”
Browning West said the rumored sales figure of $42 per share “effectively represents no premium.”
However, Swartz said in an email to Fashion Dive that the rumored offer of $42 a share is strong. Morningstar’s fair value estimate for the company is $31.
“If Gildan is sold, everybody should walk away happy,” Swartz said.
Last week, Browning West filed a legal complaint against Gildan, accusing it of acting “in a manner that is oppressive, unfairly prejudicial to,” and unfairly disregards the rights and interests of the shareholder group.
In the court filing, Browning West said Gildan’s behavior was a way to delay the shareholder vote on the composition of the company’s board, which is set to take place during the annual meeting on May 28.
