SWEAT SHOPPE FASHION
Gildan investor blasts board's sale process as 'unintelligent'
, Bloomberg News
GILDAN ACTIVEWEAR INC (GIL:CT)
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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.
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 per cent 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 US$60 per share.
Gildan’s U.S. shares fell 0.1 per cent to $37.39 on Monday in New York.
Cardinal Capital Management Inc., which owns 1.7 per cent 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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