American Apparel, the famous clothing brand that recently hired a new CEO after firing founder and head Dov Charney, confirmed on Monday that it was approached for a buyout.
The confirmation comes after several news outlets reported last week that American Apparel was being approached for a buyout. The company said in a statement that it had received "an indication of interest to acquire the company for $1.30 to $1.40 per share."
Though the board said that it will evaluate the offer and consider the matter seriously, a source familiar with the matter told Reuters that the bid was too low and that the board will not really arrive at a decision by January.
The source also added that though American Apparel has been receiving acquisition bids, it was not actively soliciting offers.
"This is the worst time imaginable to sell the company as it is on the verge of turning around and realizing its true value. For us to seriously consider an offer, it would have to be several multiples of what Irving Place is offering," said the source.
Last week, it was reported that Irving Place Capital, a private equity firm, offered to take over American Apparel for about $1.30 to $1.40 per share.
The source added that American Apparel has hired an investment bank to analyse the offers and would consider a deal if suitable. The board is not ruling out the possibility of a potential buyout but also does not want to rush any decision.
"We don't want to be stampeded into doing something that is not in the company's interest," the source added.
Amid news of the takeover bids, Dov Charney gave an interview to Bloomberg Business where he said that even though he was fired, he wants to claim what is rightly his. Charney said that he was hurt by the Board's actions and that he was robbed by the board.
Charney revealed that he was down to his last $100,000 and was staying at a friend's place on Lower East Side in Manhattan, New York City.
Charney also told Bloomberg that he took a loan from Hedge Fund Standard General to increase his stake in American Apparel but instead, the firm, which controls his stake, just used the investigation to get him fired.
Charney has been linked to some buyout bids too. According to the New York Post, Charney is looking for a financial partner to find his way back to the board of the company he so passionately built in the past 17 years.
"This whole episode has a lot less to do with pictures of naked women, and a whole lot more to do with a power struggle," an inside source told the Post.