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Gildan Activewear’s board of directors sets an April 10 cut-off date for potential buyers to place their initial offers on the Montreal, Canada-based clothing manufacturer, according to Canadian news outlet The Globe and Mail. Just two short weeks ago at the end of March, the company’s board confirmed it put Gildan up for sale after it received an “unsolicited takeover approach.”
All this comes after the board appointed Vince Tyra as the company’s new CEO in December, letting its founder and former CEO Glenn Chamandy go. This move led to a months-long battle between investment firm Browning West and Gildan’s board, with Browning West calling the board to reinstate Chamandy and replace several board members.
Now, Gildan’s legal advisers are pushing potential bidders to have their offers in by next Wednesday, April 10. The Global and Mail cites two sources familiar with the process, adding that the strategy aims to give shareholders plenty of time to consider the offers ahead of the annual meeting of shareholders, slated for May 28. During the meeting, shareholders will vote on board members, potentially electing eight new members, including a re-election of Chamandy.
The Globe and Mail says it does not plan to identify its sources, as “they were not authorized to discuss the matter.”
Initial news reports named Sycamore Partners as a potential buyer early on. The Globe and Mail says two more private equity firms have joined the buying circle, including Bain Capital and Clayton Dubilier & Rice LLC. Gildan’s advisers include the Royal Bank of Canada, Goldman Sachs Group Inc., and law firm Norton Rose Fulbright Canada LLP. Canaccord Genuity Group Inc. is the adviser to the special committee of Gildan’s board considering takeover offers.
The Globe and Mail reports that takeovers typically play out over several months, giving the company and its advisers time to narrow the list of potential buyers to a few bidders. While the annual meeting is nearly two months away, the Winston-Salem Journal says a sale could be announced before then.
Browning West’s Plan
On April 1, Browning West, which holds 5% of Gildan’s shares, shared its plan for improving Gildan’s performance if a new board is elected and Chamandy returns as CEO. The lengthy 57-page document states Browning West’s plans to reduce costs and increase market share, hoping to boost earnings and its share price to $60 intially with plans to get it to $100 in the next five years. On April 3, Gildan stock closed at just shy of $37 on the New York Stock Exchange.
Part of the plan includes moving apparel production from Honduras to Bangladesh and using excess capacity in Honduras for fleece production, reports The Canadian Press.
“There seems to be a consensus forming on how the operating path going forward should look like,” reports analyst George Doumet, Bank of Nova Scotia, adding that whoever ends up with Gildan will “focus on being the lowest-cost operator; emphasis on organic growth through market share gains; margin improvement through mix and operating leverage and use leverage to magnify shareholder returns.”
