Money Matters, Simplified.
Phillips-Van Heusen to finalize deal with Tommy Hilfiger
by Ishita Sood - March 15, 2010 - comments
Hilfiger, one of the most iconic brands of America, started facing a fade in its sales since few years. Started by Tommy Hilfiger in the 1980s, the company went private in 2006.
Retail apparel giant Phillips-Van Heusen Corp. is almost close to finalizing a deal with fashion brand Tommy Hilfiger for roughly $3 billion, according to people familiar with the matter.
Philip-Van Heusen (PVH), which owns brands like Calvin Klien and Izod, has market capitalization of $2.4 billion. It licenses brands like Geoffrey Beene and Kenneth Cole New York, while Hilfiger is licensed by London based Apax Partners.
If the deal becomes fruitful, it could be one of the first major acquisitions in retail industry after years. Final details of the deal are expected to be announced on Monday.
In 2009, PVH started producing dress shirts under license for Hilfiger.
The deal
The deal is expected to include both cash and stock with Apax Partners taking 13 percent of the equity of PVH.
People familiar with the matter said Hilfiger is a more valued brand than PVH, the latter having $400 million in debt and $350 million in total cash. Also, PVH is expected to refinance between $200 million and $300 million of its existing debt, they said.
If the deal becomes fruitful, it could be one of the first major acquisitions in retail industry after years. Final details of the deal are expected to be announced on Monday.
The deal is to be financed with $2 billion of senior secured bank debt, $500 million of high-yield bonds and $200 million of preferred perpetual equity, they added.
PVH, owned by Emanuel Chirico, will remain in New York, and Tommy Hilfiger will remain in Amsterdam.
“What is key to us is a strong brand that has enormous growth potential in North America and around the world. Any acquisition we do would be accretive to margins in the first full year,” said Chirico at a Bank of America Merrill Lynch investor conference.
The talks were reported in a New York post last week, however, both companies’ executives declined to comment on the matter.
About Hilfiger
Hilfiger, one of the most iconic brands of America, started facing a fade in its sales since few years. Started by Tommy Hilfiger in the 1980s, the company went private in 2006.
Hilfiger has been “principal designer” of the brand, expanding it under the guidance of his chief executive, Fred Gehring.
The brand is “a very strong franchise, particularly with Macy's,” Chirico had said last year.