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American Apparel confirms takeover offer
From the Financial Times of Mon, 22 Dec 2014 17:05:58 GMT
A pedestrian views mannequins displayed in the window of an American Apparel Inc. store in the Harlem neighborhood of New York, U.S., on Sunday, Feb. 23, 2014. The Conference Board is scheduled to release consumer confidence figures on Feb. 25. Photographer: Craig Warga/Bloomberg©Bloomberg

American Apparel said it received a takeover offer valuing the company at up to $245m, five days after the struggling US fashion chain fired its founder, appointed a new chief executive and witnessed a stock surge of 50 per cent amid whisperings of a buyout.

The shares rose more than 7 per cent in early trading in New York on Monday, after the company confirmed an approach. On Sunday night it adopted a new “poison pill” stockholder rights plan.

The takeover offer has come from Irving Place Capital, according to people familiar with the matter. The private equity firm is a leading player in fashion finance circles, with stakes in leading US labels such as Rag & Bone, Seven for all Mankind and Stuart Weitzman.

American Apparel has been grappling with operational and managerial upheaval this year, peaking with the attempted ousting of controversial founder and chief executive Dov Charney in June and subsequent loan defaults.

The company finally fired Mr Charney last week, replacing him with fashion industry veteran Paula Schneider.

The offer of $1.30-$1.40 a share represents a 21-31 per cent premium to American Apparel’s closing price of $1.07 on Friday.

“The board takes these matters seriously, and it will evaluate this proposal in the ordinary course of business,” the company said, without disclosing the identity of its suitor.

“The company remains focused on positioning American Apparel for a successful turnround.”

The New York Post reported last week that American Apparel has received multiple takeover offers in recent weeks, including from Irving Place Capital, which it said had partnered with Mr Charney and would allow him back into the company in some capacity.

Irving Place Capital declined to comment, while Mr Charney could not be reached for comment.

In removing its controversial leader, the board said Mr Charney had been dismissed “for cause” following his suspension in June over “alleged misconduct and violations of company policy.”

Mr Charney remains American Apparel’s largest shareholder with a 42.7 per cent stake. He shares stock voting rights with Standard General, a US hedge fund that lent Mr Charney money earlier this year to help him build his holdings. Standard General has taken majority control of the board with several new appointees — including two who sat on a committee that voted to fire Mr Charney.

Alongside the takeover news, American Apparel said Allan Mayer and David Danziger would be stepping down as co-chairs of the board. Colleen B. Brown, who joined the board in August, will take over the position. The two men will retain board seats and other responsibilities.

Shares were up 5.6 per cent to $1.13 by mid-morning trading in New York.

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