T-shirt maker Gildan rallies on report it has been put up for sale, amid latest leadership drama

By Bill Peters

Globe and Mail reports that Gildan has tapped RBC and Goldman Sachs to seek out potential purchase offers

Shares of Gildan Activewear Inc. jumped on Tuesday after the T-shirt maker said it would weigh potential offers for an acquisition or another deal, marking the latest drama over the company's leadership plans.

In a statement Tuesday, Gildan (GIL) said that after one such suitor expressed interest in acquiring the company, it formed a special committee of independent directors to review that proposal and any alternatives, including keeping the business the way it is now.

That committee, it said, "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 statement added that the committee reached out to a "small number of reputable counterparties." Several of those, it said, expressed interest in doing some kind of transaction with Gildan.

The news was reported earlier by the Globe and Mail. The newspaper said that Gildan (GIL) has tapped investment banks RBC Capital Markets and Goldman Sachs Group Inc. (GS) to seek out additional potential purchase offers after receiving a takeover bid.

Gildan shares finished 10.5% higher on Tuesday. In after-hours trade, shares were up 1%.

The announcement came as clothing demand remains weak, and as retailers remain cautious on stocking their shelves with new shirts and other clothing. Gildan, which is based in Montreal, makes T-shirts, underwear and socks and sells them to distributors, who then sell them to screen-printers, who add things like sports-team and band logos.

The exploration of a transaction also comes after Gildan in December fired co-founder and Chief Executive Glenn Chamandy. The company appointed Vince Tyra to replace him.

Chamandy's firing led to calls from some major shareholders to bring him back, saying there was no reason to disrupt the company's trajectory of gaining market share and putting up better margins than rivals. More friction could be likely as Gildan prepares for its annual shareholder meeting on May 28.

Browning West, an activist investor that owns 5.1% of Gildan, sued the company earlier this month. The firm said it was requesting that a court in Quebec force Gildan to hold the annual meeting under the supervision of an independent chair, to ensure the board wouldn't delay the event and guarantee shareholders could "hold the current board accountable and elect new leaders."

In the days after Chamandy's dismissal, the company, in defending the move, said he had struggled to find new pathways to longer-term growth. Gildan also said Chamandy had balked at previously laid-out succession plans, and worked to "entrench himself as CEO" in part by pursuing costly acquisitions and requesting to stay on to carry them out.

The company in January also alleged that Chamandy had failed to disclose that he invested in funds managed by a shareholder who favored his reinstatement, and that he "seems to have a close relationship" with Browning West.

Gildan also accused Chamandy of becoming more disengaged with the company, holding few management meetings and sending only a few emails a day. It also said he "was increasingly distracted by outside personal pursuits including the development of a luxury golf resort in Barbados."

Chamandy, in a statement afterward, said the company was focused on damaging his reputation.

"The board's latest release barely warrants a response," he said. "It continues to reflect an approach that is misguided, misleading, and value-destructive, prioritizing the obsession of board members with their own reputations above all else."

-Bill Peters

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03-19-24 1745ET

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