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Canadian clothing manufacturer Gildan Activewear Inc. said several directors will leave within days and a former Goldman Sachs Group Inc. executive will become chair, a last-ditch effort by the board to convince investors not to support the plans of an activist shareholder.
Tim Hodgson, the former head of Goldman’s Canadian unit, is to become chairman on May 1, replacing Donald Berg, who’s one of five directors planning to leave on that date.
The company said its strategic review is still active and it’s listening to potential offers, but it doesn’t expect to announce anything soon.
Gildan’s board has been fighting a months-long battle with investment firm Browning West LP, which wants to install eight new directors, drop new chief executive Vince Tyra and bring back former CEO Glenn Chamandy. Browning West has the backing of a number of other large holders for its plan — putting it in a good position to win control of the board when shareholders vote on May 28.
Gildan said it’s now recommending that two people on Browning West’s slate, retail executives Karen Stuckey and J.P. Towner, join the board, along with Hodgson and four other new directors.
But the board wants shareholders to reject the rest of Browning’s nominees and keep Tyra on.
“Over the past five months, Gildan’s Board has engaged with, welcomed and sought out the views of the company’s shareholders including Browning West and their supporters,” the Montreal-based company said in a news release Monday. “Our first choice has always been to resolve this unnecessary proxy contest in a mutually agreeable manner that benefits all shareholders of Gildan.”
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In addition to the five directors who are planning to leave May 1, directors Luc Jobin and Chris Shackelton won’t stand for re-election on May 28, the company said. Shackelton, who represents shareholder Coliseum Capital Management LLC, joined the board in December.
It’s the latest twist in an ongoing corporate saga that began after the board dismissed Chamandy in December and replaced him with Tyra, a former Fruit of the Loom executive. The decision was met with opposition from shareholders holding about a third of Gildan’s shares, led by Browning West, which then formally launched a campaign to vote out most of the current board.
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Gildan launched a sale process earlier this year after receiving an expression of interest from an unnamed potential buyer and hired investment banks including Goldman for advice. “There continues to be external interest in acquiring the company and the process is ongoing,” Gildan said Monday, adding that it does not expect to give an update about it before the May 28 annual meeting.
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