Canadian apparel maker Gildan Activewear Inc won a bankruptcy auction to acquire ailing fashion retailer American Apparel for $88 million in cash.
Gildan said on Tuesday it will buy manufacturing equipment and intellectual property rights related to American Apparel, but the Canadian company did not assume the leases of the retailer’s California manufacturing plants.
The new company is yet to decide where to make the clothing once the integration process is completed. If manufacturing shifts to Canada, American Apparel’s made in USA heritage could be trouble, reports Reuters
Gildan was facing competition from Amazon.com, Forever 21, Next Level Apparel, and Juicy Couture owner of Authentic Brands Group, but outbid them all.
The deal will be finalized towards the end of January. However, the acquisition doesn’t include the brand’s 110 remaining stores and American Apparel will need to find a separate buyer to take them over if they are to remain open.