Phillips-Van Heusen, the clothing conglomerate that owns Calvin Klein, has reached a deal to buy Tommy Hilfiger, once a leading purveyor of colorful preppy clothing, for about 2.2 billion euros (US$3 billion), in cash and stock, Phillips-Van Heusen said yesterday.
Phillips-Van Heusen, which also owns Arrow and Izod and licenses brands like Geoffrey Beene and Kenneth Cole New York, is hoping to take advantage of Tommy Hilfiger’s strong European distribution channels for its own products, sources said.
Despite Tommy Hilfiger’s reputation as a quintessentially American clothier, two-thirds of the company’s business is based in Europe.
The deal announced yesterday Monday includes approximately 1.9 billion euros in cash and 276 million euros in Phillips-Van Heusen stock. The New York clothing retailer will also assume 100 million euros in liabilities.
Hilfiger no longer holds a management role at the company that bears his name, but he remains a principal designer and a public face for the clothier.
The deal was the latest to emerge from an active market for mergers and acquisitions, as corporate buyers feel more confident in pursuing long-desired targets.
The sale of Tommy Hilfiger would be a lucrative exit for its current owner, the British private equity firm Apax Partners.
Apax has twice sought an initial public offering for the clothier, and Tommy Hilfiger’s chief executive, Fred Gehring, told reporters in September that an initial public offering (IPO) was the most likely next step for the company.
Speculation had spread about a potential deal between the two companies over recent weeks, including in a report by Women’s Wear Daily.
Shares of Phillips-Van Heusen have risen nearly 19 percent in the last month, closing on Friday at US$47.74.
Under the proposed terms of the deal, Phillips-Van Heusen will pay a combination of cash and stock, though most of the offer would be in cash. Apax will own about 10 to 15 percent of the US clothing company. Phillips-Van Heusen is expected to take on a significant amount of debt as part of the transaction.
Phillips-Van Heusen management, led by Emanuel Chirico, will remain in New York, and Tommy Hilfiger’s will remain in Amsterdam.
A deal would provide yet another owner for Hilfiger, whose founder has weathered a series of ups and downs over the last two decades. The sale to Phillips-Van Heusen is expected to close in Phillips-Van Heusen’s second quarter.
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