Gildan Activewear Inc. issued a statement Tuesday regarding media reports about the company fielding one or more overtures to acquire the Canada-based apparel company. Gildan’s Board of Directors has been in a fight with investors over control of the Board and the termination of former CEO Glenn Chamandy and the hiring of new CEO Vince Tyra.

“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,” the company wrote in a statement from the Board.

Bloomberg is reporting that private equity firm Sycamore Partners is also exploring an offer for the company, according to “people familiar with the matter.”

“After consulting with its legal and financial advisors 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 advisors, 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 continued.

“There can be no assurance any transaction will result from these discussions, and Gildan will continue to provide updates as appropriate,” it concluded.

The back and forth between Gildan’s Board and a group of large investors has involved a weekly, sometimes daily, back and forth of claims and counter-claims as to the legitimacy of the Board’s decision to fire the company’s former CEO and co-founder in favor of a newcomer to the Gildan business who was slated to start in February. That plan changed as the Board then worked to get him in the building on January 15 so he could gain a foothold in Gildan’s business.

Investment group Browning West and a group of other investors comprising nearly 40 percent of all shares of the company has repeatedly upped the ante in their dispute with the Board, first looking for the reinstatement of the former CEO, the termination of the agreement with the new CEO, a shareholder meeting, and the removal of five Board members to be replaced by the shareholders. The group also sought to removal the Board chair. The latest round of demands included control of the Board and a March shareholder meeting to approve a new spate of Board members.

Browning West, LP issued its own statement regarding the confirmation from Gildan that it “has initiated a sale process.”

“Since the onset of our campaign, we have maintained that Gildan is a high-quality business with significant latent earnings power and strong value creation potential under the right Board and management,” Browning West wrote in its response. “We are naturally concerned that the Board has initiated a sale process in order to avoid accountability following continuous and growing support for Browning West’s calls for significant Board reconstitution. Based on unsolicited feedback we have received from fellow shareholders, we believe that the Company’s owners would be dismayed at the rumored $42 USD per share indication from a potential buyer, which effectively represents no premium. To put this low price in context, if Glenn Chamandy had not been terminated and the stock had simply performed in line with the most relevant index, it would be worth approximately $42 USD per share today. We believe that the stock will recover to at least this level after our experienced and credible slate is elected in May, and it could, in our view, be worth multiples of that level over the long term.”

Browning West went on to write that the “Board’s reactionary sale process” underscores the investor group’s message to shareholders last week that a meaningful reconstitution of the Board is immediately required, even before the Annual Meeting scheduled for May.

“Our slate clearly has substantial shareholder backing and is focused on maximizing long-term shareholder value, compared to the current ‘lame duck’ Board which is poorly positioned to evaluate any offers for the company because: (i) it has already revealed its lack of competence due to its botched CEO succession process, (ii) its standalone plan under weak leadership is likely substantially inferior to any plan executed by our highly qualified slate, and (iii) the Board is entirely focused on avoiding personal accountability at the May 28th meeting rather than strong shareholder outcomes. Under no circumstances can the current Board be trusted to oversee a sale process.”

The saga continues…

Image courtesy Gildan Activewear