As first reported in a Breaking News Alert, Canadian apparel maker Gildan Activewear (asi/56842) has won a bankruptcy auction for American Apparel (asi/35297) after raising its bid to $88 million from $66 million previously. The deal is still subject to a judge’s approval, which is likely to happen on Thursday. Gildan expects the acquisition will be completed by February.
Reuters reported late yesterday that California-based Next Level Apparel (asi/73867) also made a bid to purchase American Apparel. The auction attracted interest, as well, from top brands like Amazon, Forever 21, and Authentic Brands Group – although it remains unclear if any of these other firms made formal bids.
Gildan confirmed this morning that its deal includes the acquisition of American Apparel’s intellectual property rights and certain manufacturing equipment. Gildan will also separately purchase inventory from American Apparel as it integrates the LA-based brand within its Printwear business. Gildan will not be purchasing any American Apparel retail store assets.
“We are excited to be moving forward with this acquisition. 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,” said Glenn Chamandy, president and CEO of Gildan, in a statement.
It remains unclear how Gildan’s purchase will affect American Apparel’s employees. About 3,500 American Apparel employees work in Southern California and their manufacturing jobs have been threatened by American Apparel’s bankruptcy and impending sale. In an interview with Counselor, Gildan VP of Communications Garry Bell said that the apparel maker is not assuming American Apparel’s manufacturing facility leases. Still, he noted that a detailed plan for how the fashion brand will be manufactured is being worked out now and could be revealed in the weeks ahead. “We can’t say yet where there will be potential job creation,” said Bell.
Most of Gildan’s current employees work outside the U.S., in places like the Caribbean and Central American countries. The firm does have distribution centers and yarn-spinning operations based in North Carolina and Georgia.
Bell said Gildan sees opportunity to capitalize on American Apparel’s premium fashion brand image and reputation for soft, innovative fabrics. “We have a good track record of keeping the core DNA of a brand intact while using our operational expertise to expand its success,” he said.