Gildan To Buy American Apparel Brand; American Apparel Files For Bankruptcy

(RTTNews) - Gildan Activewear Inc. (GIL, GIL.TO) announced that it has entered into an asset purchase agreement to acquire the worldwide intellectual property rights related to the American Apparel brand and certain assets from American Apparel, LLC, a U.S.-based manufacturer of fashion basics, for a cash purchase price of approximately $66 million. American Apparel voluntarily filed for Chapter 11 bankruptcy protection on November 14, 2016.

Gildan said it 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.

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

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