Gildan Activewear Inc.’s board has put the T-shirt manufacturer up for sale and private equity funds are circling, escalating a three-month battle for control of one of the country’s largest consumer product companies.
Over the past four weeks, Montreal-based Gildan received a takeover approach from a potential buyer and responded by giving investment banks RBC Capital Markets and Goldman Sachs Group Inc. a mandate to look for additional bidders, according to two sources. The Globe and Mail is not naming the sources because they are not permitted to speak publicly on the matter.
A Gildan Gildan Activewear Inc. spokesperson confirmed the company is examining the takeover approach.
“In response to the receipt of a confidential non-binding expression of interest to acquire Gildan, Gildan’s Board formed a Special Committee of independent directors to, among other things, review and consider the merits of the proposal and any alternative transaction, including maintaining the status quo and continuing to execute on Gildan’s existing business plan,” said a statement by Simon Beauchemin, a Gildan spokesperson.
“After consulting with its legal and financial advisers and considering the interests of Gildan’s shareholders and other stakeholders, 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. The Special Committee, with the assistance of its financial advisers, conducted targeted outreach to a small number of reputable potential counterparties. Several of these counterparties expressed an interest in considering a potential friendly transaction with Gildan,” the statement said.
“There can be no assurance any transaction will result from these discussions, and Gildan will continue to provide updates as appropriate,” he said.
What’s happening at Gildan? A timeline of the months-long CEO corporate battle
Gildan currently has a US$5.7-billion market capitalization. One investment banking source said a potential buyer would likely need to pay over US$7-billion, or more than US$42 per share, to acquire the company.
On Tuesday, Gildan shares traded for US$34 on the New York Stock Exchange. Founded in 1984, the company has been a strong stock market performer.
The Gildan board has also hired investment bank Canaccord Genuity Group Inc. to advise an independent committee of directors on whether any potential bid represents fair value for shareholder, the sources said.
Gildan is up for sale after a bitter leadership battle that began in December, when the board fired co-founder and chief executive officer Glenn Chamandy over succession and strategic issues. The board replaced Mr. Chamandy, aged 61, with former Fruit of the Loom executive Vince Tyra, aged 58.
In response, at least nine Gildan institutional shareholders that own over a third of the company’s stock launched campaigns to reinstate Mr. Chamandy as CEO and replace some members of the board.
Gildan shareholders are scheduled to vote on the company’s leadership at company’s annual meeting on May 28.
