Canadian manufacturer of branded clothing, Gildan Activewear, Inc. (NYSE: GIL), rose over 3 percent after the company has successfully acquired American clothing manufacturer and retailer, American Apparel in a bankruptcy auction for $88 million in cash. Under the deal, Gildan will obtain the intellectual property rights associated to the American Apparel brand and manufacturing equipment. The company, however, will not buy any of the 110 American Apparel retail stores.
"With Gildan dominating in the basics category of the $4.5 billion print-wear market, the fashion and performance categories represent particularly attractive growth opportunities," Raymond James analysts said.
According to Reuters, American Apparel filed its second Chapter 11 in November with about $177 million in debt after the failure of a turnaround plan. The company had filed for its first Chapter 11 in October 2015, and emerged from bankruptcy early last year. Guggenheim Securities LLC is acting as Gildan's financial adviser, while Sullivan and Cromwell LLP are providing legal advice.