US fashion company Tommy Hilfiger Corp, whose all-American designs have struggled in its home market, was taken over on Friday for US$1.6 billion by British buyout group Apax Partners.
The deal comes a year after Tommy Hilfiger bought the clothing brands of fashion legend Karl Lagerfeld in an attempt to move upscale. But in August, struggling to shore up its US position, the firm quietly put itself on sale.
Tommy Hilfiger himself, who introduced his first signature collection in 1984, will be retained as chief designer and strategic adviser when the takeover is concluded in the spring, the two firms said in a statement.
But company chief executive David Dyer will leave and be replaced by Fred Gehring, who is now head of Tommy Hilfiger Europe.
"We believe this transaction is a validation of the brand and the global opportunities that lie ahead," Dyer said in the statement.
Michael Phillips, a partner at Apax, said the powerful private-equity group "has a long track record of successful investments in the retail and consumer sector."
The publicly traded Tommy Hilfiger will now revert to private ownership, which Phillips said would give it the flexibility "to enable the business to grow on both operational and financial levels."
Tommy Hilfiger designs and produces casual and sports clothes, often featuring the preppy look of Ivy League American students, along with fragrances and accessories.
The company's lines have performed well in Europe and Asia, but its US business has been floundering, prompting the hunt for a deep-pocketed suitor.
Apax, which has more than US$20 billion in funds for deal-making, reportedly beat out two other investment groups for Tommy Hilfiger.
Apax is no stranger to the apparel business. It helped Phillips Van Heusen Corp purchase Calvin Klein Inc, and owns stakes in Tommy Bahama and Spyder Active Sports, among other investments in the industry.
The cash offer from Apax values Tommy Hilfiger at US$16.80 a share, a premium of roughly 30 percent to where the shares were trading before the company began shopping itself around.
Tommy Hilfiger stock added as much as US$0.13 soon after Friday's opening bell, but by the close was unchanged at US$16.00.
Founder Tommy Hilfiger said his company still had worldwide ambitions.
"This is an exciting new phase in our evolution as a global lifestyle company," he said, calling Apax the "ideal partner to help us in our next stage of growth".
"I am also pleased that in addition to ensuring the strength of the Tommy Hilfiger brand at the higher end of the spectrum, we can continue to move ahead with the already successful global expansion," he said.
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