Gildan Activewear Inc., a clothing manufacturer, has found itself in the midst of a power struggle after the announcement of CEO Glenn Chamandy’s replacement by Vincent Tyra. However, it has been revealed by a director of the company that Chamandy had actually been pushing for large acquisitions before his departure.

These potential acquisitions, which deviated from Gildan’s main focus on textile manufacturing, raised concerns among the board due to the significant increase in debt they would incur. Additionally, these acquisitions were considered highly dilutive and high-risk. When the board conveyed their apprehensions to Chamandy, it led to a deterioration in the relationship between the CEO and the board.

Following Chamandy’s exit, several prominent investors, including Jarislowsky Fraser Ltd. and Pzena Investment Management Inc., expressed opposition to the decision and called for Chamandy’s reinstatement. Together, these investors hold approximately 25% of Gildan’s shares, potentially granting them the power to request a shareholder meeting in order to instigate changes within the board.

To address the backlash, Gildan is taking measures to fortify its position. The board has extended an invitation to Chris Shackelton, managing partner at Coliseum Capital Management, one of the company’s largest shareholders, to join as a director. Coliseum currently possesses a 6.6% stake in the company and has pledged its support to the board nominees for the next two years. Furthermore, the firm has committed to purchasing additional shares.

Since Chamandy’s departure caused a sharp decline in the company’s stock value, Gildan, which was founded by Chamandy’s family and is headquartered in Montreal, has been under intense scrutiny. With the revelation of Chamandy’s push for large acquisitions prior to his exit, the power struggle within the board has become even more intricate. The future of Gildan and its leadership remains uncertain as investors and stakeholders continue to voice their opinions on the matter.

Useful Links:
1. Gildan Activewear Inc. Investor Relations
2. Coliseum Capital Management Official Website