Reuters

(Reuters)

American Apparel Confirms Takeover Offer, Sets New 'Poison Pill'

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Struggling American Apparel Inc, 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.

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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 percent to $1.16 in early trading on Monday.

American Apparel Inc announced on Sunday it had adopted a new, one-year "poison pill" takeover defense with a 10 percent 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.

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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 Brown completes the change at the top of the company. American Apparel fired Charney last week, ending a tenure marked by sexual harassment allegations which were never proven or won.

Longtime retail executive Paula Schneider was named his replacement.

Charney increased his ownership of American Apparel to about 43 percent 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 Charney.

 

(Reporting by Supriya Kurane and Sruthi Ramakrishnan in Bengaluru; Editing by Gopakumar Warrier and Ted Kerr and Clive McKeef)