Blog Coverage Gildan Activewear Announces Asset Purchase Agreement with American Apparel Brand

Upcoming AWS Coverage on Michael Kors Post-Earnings Results

LONDON, UK / ACCESSWIRE / November 15, 2016 / Active Wall St. blog coverage looks at the headline from Gildan Activewear Inc. (NYSE: GIL) (“Gildan”) as the company announced on November 14th, 2016, that it 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, (“American Apparel”), a U.S.-based manufacturer of fashion basics, for a cash purchase price of approximately $66 million. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

One of Gildan Activewear’s competitors within the Textile – Apparel Clothing space, Michael Kors Holdings Ltd (NYSE: KORS), announced ON November 10, 2016, its financial results for the fiscal 2017 second quarter ended October 1, 2016. AWS will be initiating a research report on Michael Kors in the coming days.

Today, AWS is promoting its blog coverage on GIL; touching on KORS. Get all of our free blog coverage and more by clicking on the link below:

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The Deal

Gildan announced that 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.

Gildan stated that American Apparel® brand is a highly recognized brand among consumers and within the North American printwear channel and that it would represent a strong complementary addition to the Company’s portfolio of brands. The acquisition will 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. Furthermore, 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.

American Apparel Files for Bankruptcy

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.

American Apparel emerged from bankruptcy reorganization this year after filing for Chapter 11 in October of 2015. American Apparel also missed the first of two payments to unsecured creditors as required under its previous Chapter 11 plan. CEO Paula Schneider, who led the company through the reorganization, left the company in October and was replaced by the company’s general counsel, Chelsea Grayson. On November 08th, 2016, American Apparel announced that it was closing all 13 of its stores in the UK.

Stock Performance

At the close of trading session on November 14, 2016, following the announcement, Gildan Activewear’s stock price rose 5.04% to end the day at $26.45. A total volume of 1.23 million shares were exchanged during the session, which was above the 3-month average volume of 454.43 thousand shares. The stock currently has a market cap of $6.25 billion. The company’s shares are trading at a PE ratio of 18.47 and have a dividend yield of 1.17%.

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