Phillips-Van Heusen (PVH), owner of the Calvin Klein label, has agreed to buy fashion label Tommy Hilfiger from London-based Apax Partners in a $3 billion cash-and-stock deal to boost its presence in Europe and Asia.
The deal will make Phillips-Van Heusen one of the largest suppliers of menswear to U.S. department stores, and will keep Hilfiger founder Tommy Hilfiger in his role as principal designer for the popular clothing line.
It will also will add yet another high-profile name to PVH’s current portfolio, which includes the likes of Izod and Calvin Klein. PVH also distributes menswear under such renowned labels as Kenneth Cole New York, Michael Kors, Donald Trump and DKNY.
The deal would mark an end to London-based private equity firm Apax’s plans for an initial public offering for the iconic fashion brand which it had bought in 2006 for almost half the price at $1.6 billion.
“The deal certainly makes sense and that can be seen from PVH’s share price. A lot of people out there see that although it is quite a costly acquisition, they are still getting it at quite a low price,” IBISWorld analyst Toon van Beeck said.
Tommy Hilfiger has spent the last few years trying to repair the damage caused by shifting its focus to a more mainstream group of buyers. The brand suffered years of sales declines after its logo-heavy designs helped make it a staple of urban streetwear, but alienated more affluent customers. Now, the company is expanding more quickly abroad than in the United States.
“It’s an opportunity to really revamp Tommy Hilfiger, which was such an iconic brand in the 90s and has somewhat died,” van Beeck said.
Phillips-Van Heusen will pay $2.6 billion in cash and $380 million in common stock for Tommy Hilfiger.View Comments