American Apparel confirmed it had received an offer for $1.30 to $1.40 per share and the company’s board is evaluating the proposal in the ordinary course of business.
American Apparel also announced the appointment of its first female board chairwoman.
American Apparel ousted its founder
As reported by ValueWalk, last week American Apparelofficially replaced the embattled founder and former CEO of the sexually edgy retailer. The announcement came after sex scandal charges with an employee and claims the former CEO, Dov Charney, had misappropriated company funds to pay for travel for his relatives.
The Los Angeles retailer also named retail-industry veteran Paula Schneider as CEO and in doing so formally terminated its founder Dov Charney.
American Apparel has struggled with dwindling sales and swelling losses. In the three months through September 30, the company lost $19.2 million, compared with a loss of $1.5 million a year earlier. The company’s sales dropped 5% to $156 million from a year earlier.
As reported by ValueWalk last week, American Apparel had been approached by Irving Place Capital about a possible takeover. It was reported that Irving Place sent an expression of interest to the board of the Los Angeles retailer in the last few weeks. However, it was said the board initially rebuffed the approach as the initial price was low.
Sources pointed out that Irving Place had since increased the price range to $1.30 to $1.40 a share and the board has yet to respond to the second approach.
Mirroring the developments, shares of the retailer rose 7% to $1.07 per share last week.
American Apparel confirms buyout offer
In a statement today, American Apparel said its board of directors confirmed that it has received an indication of interest to acquire the company for $1.30 to $1.40 per share. The company said the board takes these matters seriously and would remain focused on positioning American Apparel for a successful turnaround.
American Apparel also disclosed that Allan Mayer and David Danziger have stepped down as co-chairmen of the board, though they will retain their positions as chairs of the compensation and audit committees, respectively. The company said they will be replaced as chair by Colleen Brown, who became the first woman to join the company’s board in August.
In a statement, David Danziger said: “The board has made progress this year, and I believe we will look back and mark this as an important turning point. And we’re ending the year by establishing an updated code of conduct that will serve as an important guide for our company going forward. Step-by-step, we are transforming this company and positioning it for success”.
Investors were enthused by the latest developments, as the Los Angeles retailer’s shares were up over 7% before today’s market opening.