Dov Charney, the ousted boss of American Apparel, has raised his stake in the fashion retailer from 23 per cent to 43 per cent as he fights to regain control of the company he founded.
His move, through a deal he reached with the New York hedge fund Standard General, came as American Apparel’s board put in place a “poison pill” defence that in effect blocks large investors from increasing their stakes.
Legal experts said the future of American Apparel could now depend on whether the board moved quickly enough to put their poison pill defence in place before his share deal was sealed.
Standard General notified Mr Charney it had bought the stock it is selling him on the same day that the board announced its defensive “rights plan” poison pill.
“This is a legal issue now – it’s no longer business,” Harvard Business School professor Robert Kaplan said. “Mr Charney moved quickly… they may have waited too long to put the pill in.”
American Apparel’s board replaced Mr Charney as chairman and said it would fire him “with cause” as chief executive last month due to an “ongoing investigation into alleged misconduct”. He has faced several lawsuits in recent years alleging sexual misconduct, which he has always denied.
American Apparel was sticking to its guns, saying its poison pill stockholder rights plan will last for one year.
“The rights plan is designed to limit the ability of any person or group, including Dov Charney, to seize control of the company without appropriately compensating all American Apparel stockholders,” American Apparel said.
“The rights plan is not intended to prevent or deter takeover bids that offer fair treatment and value to all stockholders.”
Mr Charney also called for a shareholders’ meeting for 25 September to call for changes to the board. The company has so far refused to engage with Mr Charney.