NEW YORK (TheStreet) -- Beleaguered American Apparel (APP) may end up being owned by a private-equity firm with experience in fixing struggling retailers, but a strong case could be made that ousted founder Dov Charney's creation should be acquired by either Target (TGT) or Macy's (M) .To light a fire under sluggish U.S. sales, especially in apparel, and expand abroad, Target and Macy's should be considering a bid for American Apparel.
Although not a cultural fit at first blush at each old-school retailer, long tenured executives at both companies could infuse American Apparel with the proper operating discipline that it needs to reach its full financial potential. It also helps that Target and Macy's are cash-rich companies that could easily bid aggressively for American Apparel.
The hypothetical play by either retailer, however, likely wouldn't come without a fight from private-equity shop Irving Place Capital. On Monday, American Apparel's board received a bid, reportedly from the private-equity firm for $1.40 a share, which would value the retailer at about $244 million.
Shares were trading early Tuesday at $1.06 a share.
A source told Reuters on Monday evening that the board thinks that the takeover offer should be "several multiples" higher.
American Apparel also said Sunday that it has adopted a new, one-year "poison pill" takeover defense with a 10% trigger.
Here is why it makes sense for Target or Macy's to offer those "several multiples" and join the bidding and why American Apparel's board should listen.Must Read: Whole Foods CEO on How it will Beat Rivals in 2015