Though there were a few conditions and caveats attached, clothing manufacturer Gildan Activewear (NYSE:GIL) (TSE:GIL) agreed to stage a special shareholder meeting. However, one of the biggest conditions was that it turned to the Quebec courts system to step in and lend it a hand. That’s making for some unexpected conditions, and Gildan actually gained fractionally in Monday afternoon’s trading as a result.
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The special meeting in question came about as the result of a director committee’s recommendation and will focus on a slate of concerns brought up by Browning West, an investment company located in Los Angeles. The committee in question considered the notion and decided to stage the meeting alongside its upcoming annual meeting so as to take advantage of the turnout from shareholders, which was expected to be high around the event.
However, Gildan alleged that Browning West had violated Canadian securities law and should never have been able to pose the issues in the first place, a point it’s looking to have the Quebec court system step in and address. It wants the court to cancel the special meeting outright.
Stirrings Around Board Composition
The meeting in question, reports note, will focus on just who’s sitting on Gildan’s board of directors. Indeed, the move may not have Gildan’s support, but it does have the support of another investment group: Pzena Investment Management. Pzena came out in support of Browning West’s plan, and since Pzena currently holds 6.5% of Gildan, that makes Pzena a pretty heavy hitter in any kind of proxy war for control of the Gildan board.
Is Gildan a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on GIL stock based on five Buys, three Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 12.7% rally in its share price over the past year, the average GIL price target of C$51.79 per share implies 14.57% upside potential.
