Phillips-Van Heusen (PVH), the owner of Calvin Klein, will buy the famous American clothing brand Tommy Hilfiger from the private-equity company Apax Partners for ?2.2 billion (Dh11.07bn), adding the brand to a stable that includes the Izod clothing line. Apax will get ?1.92bn in cash and ?276 million worth of PVH common stock, PVH said yesterday. Apax bought Hilfiger in 2006 for about US$1.6bn (Dh5.87bn) and delisted the company the same year.
"This is a unique opportunity to bring together two premier companies, each with iconic brands, which will deliver enhanced opportunities for our stockholders, business partners, customers and employees as we leverage a combined global platform in the years ahead," said Emanuel Chirico, the chairman and chief executive of PVH, based in New York. "During almost four years as a private company under the leadership of Fred Gehring and his team, Tommy Hilfiger has continued to gain momentum in Europe and Asia, while successfully rebuilding its business in North America, producing impressive overall performance and generating strong profitability and free cash flow even during the recession."
Mr Gehring, the chief executive of Tommy Hilfiger, said: "We are very pleased to be joining forces with PVH, one of the premier apparel companies in the world. The scale of the combined company in the US will deliver obvious benefits for both companies, while Tommy Hilfiger's significant international presence and infrastructure offers an opportunity for PVH to introduce a number of its brands into the international market."
The purchase will boost sales of PVH, which also owns the 159-year-old shirt maker Arrow, to $4.6bn, the company said. PVH has gained 17 per cent in New York Stock Exchange composite trading this year and rose 7 cents to $47.74 on Friday. The company has a market value of about $2.5bn. Apax had been expected to get $3.4bn for Tommy Hilfiger, JPMorgan Chase analysts Christopher Kim and Brian Tunick wrote in a March 9 research note.
In January last year, Tommy Hilfiger delayed an initial public offering in Amsterdam after stock markets tumbled. Apax and Mr Gehring have sought to revive the brand for almost five years as US and European teenagers defected to labels such as Abercrombie and Fitch. Tommy Hilfiger first sold shares in 1992 and increased annual revenue to almost $2bn in 2000. Revenue in the year ending March 31 may total $2.25bn, with about 34 per cent of that coming from US markets, PVH said.
The clothing company was started in 1985 by its New York-born namesake designer, who opened a boutique while still a high-school student. Mr Hilfiger will remain the principal designer, PVH said. * with Bloomberg