Gildan Activewear, a leading manufacturer and marketer of quality family apparel, 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, a US-based manufacturer of fashion basics, for a cash purchase price of approximately US$ 66 million.

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. The transaction is subject to approvals by the American Apparel bankruptcy process and customary conditions, and is expected to close during the first quarter of 2017.

Growth opportunities

The American Apparel brand is a highly recognised brand among consumers and within the North American printwear channel. “The American Apparel brand would represent a strong complementary addition to the company’s portfolio of brands,” the company explains.

The acquisition is expected to 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.

Bankruptcy

American Apparel voluntarily filed for Chapter 11 bankruptcy protection on 14 November 2016. 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.

Consummation of the acquisition would be subject to Gildan being selected as the successful bidder in any such auction and Bankruptcy Court approval. Gildan will be entitled to a break-up fee and certain expense reimbursements if it does not prevail as the successful bidder at any such auction.

Gildan

Gildan is a leading manufacturer and marketer of quality branded basic family apparel, including T-shirts, fleece, sport shirts, underwear, socks, hosiery, and shapewear. The company sells its products under a diversified portfolio of company-owned brands, including the Gildan, Gold Toe, Anvil, Comfort Colors, Alstyle, Secret, Silks, Kushyfoot, Secret Silky, Peds, MediPeds and Therapy Plus brands.

The company sells its products through two primary channels of distribution, namely printwear and retail markets. It distributes its products in printwear markets in the US, Canada, Europe, Asia-Pacific and Latin America. Gildan owns and operates vertically-integrated, large-scale manufacturing facilities, which are primarily located in Central America, the Caribbean Basin, North America and Bangladesh.

www.gildan.com