Forever 21, Amazon eye American Apparel

American Apparel had agreed to a stalking horse bid by Gildan Activewear, which included an option to keep its manufacturing plants in southern California, in November.
American Apparel had agreed to a stalking horse bid by Gildan Activewear, which included an option to keep its manufacturing plants in southern California, in November.PHOTO: AGENCE FRANCE-PRESSE

Any offer to buy bankrupt US firm will have to top Canadian Gildan Activewear's $95m bid

NEW YORK • Online retailer Amazon.com and teen apparel store chain Forever 21 are among the companies weighing offers to acquire bankrupt American Apparel, people familiar with the talks said.

The bankruptcy auction of Los Angeles-based American Apparel, which made its branding theme "Made in the USA", will determine the future of a major clothing manufacturing plant in California, one of the most expensive US states in terms of labour costs.

Keeping jobs in the United States has become a hot-button political issue since the presidential election. Ford Motor on Tuesday reversed plans for a US$1.6 billion (S$2.3 billion) factory in Mexico and said it would add 700 jobs in Michigan after receiving criticism from President-elect Donald Trump.

Amazon and Forever 21, as well as California-based apparel maker Next Level Apparel and brand licensor Authentic Brands Group, are in talks with American Apparel and its financial advisers about submitting offers ahead of a deadline today, the people said on Wednesday.

Any successful offer would have to top a US$66 million (S$95 million) stalking horse bid by Canadian apparel maker Gildan Activewear, which American Apparel agreed to when it filed for bankruptcy in November.

Gildan's offer included an option to keep American Apparel's manufacturing plants in southern California, which employ about 3,500 workers, making it one of the biggest garment makers in the US.

But Gildan plans to preserve only some of the California production should its bid prevail, the sources said. Many of Gildan's production facilities are in low-cost countries.

An outcome in the auction is expected next week, the sources said, asking not to be identified because the deliberations are confidential.

American Apparel declined to comment. Amazon, Forever 21, Next Level Apparel and Authentic Brands did not respond to requests for comment.

A Gildan spokesman said in an e-mail on Wednesday that it is putting together all the necessary information from its due diligence to best position itself in the auction.

Amazon's acquisition of American Apparel would be a major push for the e-commerce company into branded fashion and apparel. The Seattle-based company began to launch private label brands last year.

Forever 21, founded by Korean-American Do Won Chang, is known for its low retail prices, helped by lower labour costs abroad. American Apparel's first bankruptcy in 2015 was due in part to its relatively high labour costs. REUTERS

A version of this article appeared in the print edition of The Straits Times on January 06, 2017, with the headline 'Forever 21, Amazon eye American Apparel'. Print Edition | Subscribe