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Gildan negotiates with takeover candidates, activist investor contends

By Jan Schroder


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Credits: Gildan Activewear Inc.

The Canadian textile group Gildan Activewear Inc. confirmed on Tuesday evening that it has received a takeover bid.

The parent company of the American Apparel brand, which recently caused a stir due to a controversial change in management, was responding to corresponding media reports, which had alleged the prospective buyer is the financial investor Sycamore Partners.

Gildan announced that it had received a letter of intent aimed at a takeover, without naming the sender. As a result, a special committee has been formed to examine the offer and alternative scenarios. The possible options include maintaining the status quo and continuing to work on the implementation of the existing strategy, the company emphasised.

The group also explained that it considers it its duty to contact other potential takeover candidates in order to "maximise the value of a potential transaction".

The special committee, together with the group's financial advisors, had already selected "a small number of reputable negotiating partners", some of whom had "expressed an interest in considering a potential friendly takeover of Gildan".

However, the group emphasised that it is not yet certain whether the talks will lead to a transaction of any kind.

Investors express concern, reaffirm call for board refresh

The news did not sit well with activist investor Browning West, which owns around 5 percent of the company’s shares and had previously voiced its concerns regarding the recent management shifts.

In a statement to FashionUnited responding to the launch of the sales process, the company said such a decision was made to “avoid accountability following continuous and growing support for Browning West’s calls for significant board reconstitution”.

It continued: “Based on unsolicited feedback we have received from fellow shareholders, we believe that the company’s owners would be dismayed at the rumoured 42 dollars per share indication from a potential buyer, which effectively represents no premium.”

As such, Browning West reaffirmed its call for an immediate board refresh, calling the current set up “poorly positioned to evaluate any offers for the company”.

Executive Management
Gildan Activewear