Gildan Activewear has entered into an asset purchase agreement (APA) to acquire the worldwide intellectual property rights related to the American Apparel brand and certain assets from American Apparel, LLC, (American Apparel) for a cash purchase price of approximately US$66 million. Gildan also reports that it will separately purchase inventory from American Apparel to ensure a seamless supply of goods in the imprint channel while the company integrates the brand within its printwear business. Gildan will not be purchasing any retail store assets.
American Apparel’s UK business went into administration on 8 November, 2016 and the company voluntarily filed for Chapter 11 bankruptcy protection in the US today (14 November , 2016). The closing of the Gildan acquisition is, therefore, subject to approvals by the American Apparel bankruptcy process and customary conditions, and is expected to occur during the first quarter of 2017. The Bankruptcy Court may require American Apparel to hold an auction for its assets and business under which the proposed acquisition would constitute the initial bid. For the acquisition to proceed, Gildan would then need to be selected as the successful bidder in any such auction and gain the Bankruptcy Court’s approval.
Commenting on the proposed acquisition, Gildan stated that American Apparel would represent a strong complementary addition to the Company’s portfolio of brands, adding that the acquisition will create revenue growth opportunities by leveraging Gildan’s extensive distribution network in North American and international printwear markets to further increase the brand’s penetration in the faster growing fashion basics segments of these markets. In addition, with American Apparel’s strong heritage as a consumer brand, the company will evaluate potential wholesale opportunities for leveraging the brand within its branded apparel business.