Montreal-based Gildan Activewear Inc. on Tuesday said it emerged as the winner in the court-supervised auction to acquire the American Apparel brand and certain assets (but none of its 110 stores) with a final cash bid of approximately $88 million, according to a press release.
The acquisition will include the worldwide intellectual property rights related to the American Apparel brand and certain manufacturing equipment. Gildan will also separately purchase inventory from American Apparel to ensure a seamless supply of goods to the printwear channel while Gildan integrates the brand within its printwear business.
The transaction is subject to a Delaware bankruptcy court approval on Thursday, and Gildan anticipates completing the acquisition by early February.
The sale of American Apparel to a Canadian T-shirt maker caps a rough several years for the made-in-America retailer. Leading up to the auction, several other companies jockeyed for the company’s assets: California-based apparel maker Next Level Apparel, teen apparel retailer Forever 21, band licensor Authentic Brands Group LLC and even e-commerce giant Amazon were said to have prepared bids, which had to outpace Gildan’s original $66 million stalking horse offer.
“We are excited to be moving forward with this acquisition,” Gildan president/CEO Glenn Chamandy said in a statement Tuesday. “The American Apparel brand will be a strong complementary addition to our growing brand portfolio. We see strong potential to grow American Apparel sales by leveraging our extensive printwear distribution networks in North America and internationally to drive further market share penetration in the fashion basics segment of these markets.”
American Apparel has remained a go-to apparel retailer for basics, but it also was known for its sexual and otherwise controversial marketing. The company suffered during its bruising battle with founder Dov Charney, ousted in late 2014, who refused to go quietly, and the sides battled in and out of court for nearly two years. Ultimately, Charney tried to buy back his company during its first bankruptcy late last year, but the board rejected his $300 million offer. That bid, put together with the help of investment firms Hagan Capital Group and Silver Creek, topped the value range that American Apparel’s investment bank had estimated in court documents, but it also came with the stipulation that Charney would return.
Fast fashion, changing consumer tastes and priorities and fatigue around American Apparel’s highly sexualized marketing took a toll on the retailer. Yet CEO Paula Schneider (who left in October to head up the premium brands unit of private label apparel manufacturer Delta Galil Industries) and her team never came up with anything remotely daring or even interesting enough to take the place of Charney’s vision, which included a dedication to manufacturing in Los Angeles and providing decent pay and treatment of factory workers, many of whom stayed loyal to him throughout the legal and public relations tussles of the last couple of years.
Gildan, which runs factories in low-cost regions of Latin America, is unlikely to maintain the purity of made-in-the-USA manufacturing that both Charney and even Schneider were dedicated to preserving. The company said it will provide details on the projected financial contribution of the acquisition in its February earnings report. Guggenheim Securities, LLC is acting as the Company’s financial advisor for the transaction and Sullivan and Cromwell LLP is acting as legal advisor. A request for comment from American Apparel was not provided to Retail Dive by press time.