American Apparel Deal Goes Through

After nearly a year of negotiations and paperwork, Endeavor Acquisition Corp. in New York completed its approximately $774 million acquisition of American Apparel Inc., the vertically integrated manufacturer of T-shirts and other casual clothing made in downtown Los Angeles.

Endeavor, a blank-check company that traded on the American Stock Exchange under the symbol EDA, has changed its name to American Apparel and is now traded under the symbol AAP. American Apparel was trading at $14.95 a share at the close of market on Dec. 13.

The acquisition, which includes $110 million in debt, was approved Dec. 12 at a morning shareholder meeting in New York.

Dov Charney, who was one of American Apparel’s founders and not available for comment, will stay on as chief executive and president for at least three years, receiving an annual base salary of $750,000 and the possibility of earning a bonus of up to 150 percent of his annual salary. (Originally, Charney said he would work for only $1 a year after the merger was completed.) In addition, Charney will be issued 37.2 million shares of stock, up from 32.25 million.

Charney’s partner, Song Ho (Sam) Lim, who owns 50 percent of the company, will be paid $67.9 million for his shares in American Apparel.

In other changes to the deal, Endeavor said it will increase the stock option and stock plans for American Apparel employees to 7.7 million shares, up from 2.7 million mentioned in the original agreement.

American Apparel, founded in the late 1990s by iconoclastic T-shirt maker Charney, has defied most apparel business models by producing all its garments in a factory in Los Angeles. Most large U.S. clothing firms today design their goods domestically and produce overseas to save on labor costs.

The company prides itself on its sweatshop- free mentality, with the company’s more than 6,000 employees earning the state minimum wage of $7.50 or higher. Many have access to affordable health care and other benefits.

In 2003, American Apparel opened its first retail store on Sunset Boulevard in Los Angeles. It now has more than 166 retail stores in 13 countries.

Terms of the original deal with Endeavor were increased after American Apparel posted solid third-quarter revenues of $106.5 million, up 34 percent from a year earlier. —Deborah Belgum