Gildan to Acquire American ApparelAmerican Apparel has filed for bankruptcy, for the second time in 13 months with Canadian-based Gildan Activewear Inc. agreeing to acquire the company for $66 million, Forbes reported yesterday. Gildan will also separately purchase inventory from American Apparel to ensure a seamless supply of goods in the printwear channel while the Company integrates the brand within its Printwear business. Gildan will not be purchasing any retail store assets.
Gildan made the announcement on Monday morning with a letter to employees. The bankruptcy filing had been expected as a series of events over the last couple of weeks pointed to this outcome. Last week, American Apparel abandoned its 13 U.K. stores by hiring KPMG as administrators to wind down that operation. Inventory was no longer being shipped leaving only enough product for the holidays. Gildan noted in its letter that with the American Apparel court filing it will allow an auction process where other potential buyers could propose a better deal and submit competing offers. Gildan expressed confidence that it would be able to get the best deal done, although it noted that the auction process takes time to complete.
A key component of the deal is retaining the manufacturing in the United States and primarily in Los Angeles. This was a main differentiator of the company. In the employee letter, Gildan said it is invested in U.S. manufacturing and would keep the work in the Los Angeles area. It cited a recent acquisition of Alstyle Apparel that is also based in southern California and where Gildan has maintained operations.