American Apparel Founder Trying to Buy Back His Company
Dov Charney isn't giving up without a fight.
Dov Charney may have just recently been fired from the board of the company that he founded, but he’s not willing to give up without a fight. By partnering with investment firm Standard General, the ousted chief was able to raise his stake in American Apparel from 27 to 43 percent. This was done by purchasing 27 million shares, which only cost $19.5 million since the company’s share price tumbled to 50 cents under Charney’s watch. Despite being a subject of controversy, Charney still has backers, and gaining the last 7% needed to retake control is a distinct possibility.
This past Saturday, American Apparel’s board fought back with a shareholders rights plan, often referred to as a “poison pill.” This plan would prevent Charney or any other investor from increasing their stake in the company by flooding the market with cheap, diluted shares. “I’d be surprised if the whole thing didn’t end up in litigation,” Charles Elson, director of the John L. Weinberg Center for Corporate Governance, told the New York Times, adding that “this would be a great law-school exam” because of all the crazy twists and turns this story has taken.