Canadian retailer Gildan Activewear is the winner in the court-supervised auction to acquire bankrupt U.S. fashion retailer American Apparel LLC for $88 million in cash. The transaction is subject to Bankruptcy Court approval on January 12, 2017, and Gildan anticipates completing the acquisition by early February.
The deal includes the acquisition of the worldwide intellectual property rights related to the American Apparel brand and “certain manufacturing equipment,” according to a press release from Gildan. “The company will also separately purchase inventory from American Apparel to ensure a seamless supply of goods to the printwear channel while the company integrates the brand …,” Gildan announced.
However, Gildan confirmed, per the terms of its original asset purchase agreement last November, it will not be buying any of the retail store assets of American Apparel.
“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,” said Glenn Chamandy, President and CEO of Gildan.
Gildan said it would provide details on the projected financial contribution of the acquisition when it reports its full-year 2016 earnings results and gives guidance for 2017.
American Apparel initially filed for Chapter 11 in October 2015, but a turnaround plan that put it under the control of its bondholders failed, resulting in a second bankruptcy filing in November 2016.
Gildan Activewear has 48,000 employees worldwide.