Retailer American Apparel confirms takeover offer

Struggling American Apparel, which fired controversial chief executive Dov Charney last week, said it was evaluating a proposed takeover and announced the appointment of a new head of the board, sending its shares up in early trade.

The clothing retailer and manufacturer said the proposed offer - from a party it did not identify - was pitched at $1.30 to $1.40 per share, which would value the company at $226 million-$243 million.

The Wall Street Journal reported last week that private equity firm Irving Place Capital was interested in making a bid at $1.30 to $1.40 per share.

American Apparel’s shares rose 8.4 per cent to $1.16 in early trading on Monday.

American Apparel announced on Sunday it had adopted a new, one-year “poison pill” takeover defence with a 10 per cent trigger but said this was not meant to deter bidders.

“The board implemented the rights plan as an additional means to ensure that all American Apparel stockholders are treated fairly,” the company said.

The company also said on Monday that Colleen Brown, who has been on the board since August, would take over as chair to replace co-chairs Allan Mayer and David Danziger.

The appointment of Ms Brown completes the change at the top of the company. American Apparel fired Mr Charney last week, ending a tenure marked by sexual assault allegations and scandal.

Longtime retail executive Paula Schneider was named his replacement.

Mr Charney increased his ownership of American Apparel to about 43 per cent in July through a loan from hedge fund Standard General, although the fund controls his stake as collateral.

Standard General has placed several affiliates on the retailer’s board and has plotted a future for the struggling company with or without Mr Charney.

Reuters