Gildan Activewear’s (NYSE:GIL) largest shareholder said the company’s current share price does not reflect the “long-term prospects” of the company and strong market position “should lead to attractive returns for long-term investors relative to what could be a short-term view in light of events and stock underperformance.”
Jarislowsky Fraser Ltd, a subsidiary of Bank of Nova Scotia, owns a 7% stake in Gildan, according to Bloomberg.
The statement comes in the wake of efforts by Gildan’s board (GIL) to sell the company, engaging RBC Capital and Goldman Sachs to seek potential buyers. The company said it had several parties interested in a “friendly takeover” with private-equity firm Sycamore Partners recently expressing interest in acquiring the Canadian clothing manufacturer.
The decision to sell the company comes on the heels of a contentious battle with shareholders over the decision to fire Gildan co-founder and CEO Glenn Chamandy. Citing “dereliction of duty” Gildan fired Chamandy and replaced him with Vince Tyra.
Chamandy’s ouster stirred outrage among shareholders who urged the company to reinstate Chamandy and remove board chairman Donald Berg as the board’s “poor handling of CEO succession and questionable judgement have put Gildan’s business and shareholders at risk.”
The company was subsequently sued by Browning West for taking “oppressive actions which fundamentally disregard the rights and interest of shareholders,” and to compel the company to conduct the May 28 annual meeting without delay.
Browning West is also challenging the company’s efforts to find a buyer claiming that a “reactionary” sale will undervalue the company.
Since announcing their intention to sell the company, shares of Gildan (GIL) have gained as much as 15% and were last trading at $37.76 per share.
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