June 11, 2023

DealBook: PVH to Buy Warnaco Group for $2.9 Billion

A billboard for Calvin Klein in Manhattan. PVH controls the Calvin Klein jeans and underwear licenses.Mikael JanssonA billboard for Calvin Klein in Manhattan. Warnaco Group controls the Calvin Klein jeans and underwear licenses.

LONDON — The fashion company PVH Corporation agreed on Wednesday to acquire the Warnaco Group in a $2.9 billion deal, bringing various Calvin Klein brands under one corporate umbrella.

Under the terms of the deal, PVH, whose brands include Calvin Klein and Tommy Hilfiger, said it was offering $51.75 in cash and 0.18 of a share in PVH for each share in Warnaco, which is based in New York and controls the Calvin Klein jeans and underwear licenses.

The combined cash-and-stock deal is worth $68.43, a 34 percent premium on Warnaco’s closing share price on Friday. Trading in New York was closed on Monday and Tuesday because of Hurricane Sandy.

The acquisition would give Warnaco shareholders a combined 10 percent stake in the enlarged company, according to PVH.

“This is a unique opportunity to reunite the ‘House of Calvin Klein,’ ” PVH’s chief executive, Emanuel Chirico, said in a statement. “Having direct global control of the two largest apparel categories for Calvin Klein – jeans and underwear – will allow us to unlock additional growth potential of this powerful designer brand.”

PVH acquired the Calvin Klein brand in 2003. The deal gave the company control over the design and product development for the Calvin Klein brands. Warnaco holds the licensing agreements for the brand’s jeans and underwear divisions.

The acquisition of Warnaco comes two years after PVH acquired the Tommy Hilfiger brand for $3 billion. The deal gave PVH, which also owns Arrow and Izod and licenses others brands like Geoffrey Beene and Kenneth Cole New York, greater access to the European market.

PVH said it expected $100 million of annual cost savings by the third year after the completion of the deal, which is expected to close early next year. The company said it would incur $175 million in one-time costs related to these activities.

PVH was advised by Peter J. Solomon, Barclays, Bank of America Merrill Lynch and Citigroup, and the law firm Wachtell, Lipton, Rosen Katz, while Warnaco was advised by JPMorgan Chase and the law firm Skadden, Arps, Slate, Meagher Flom.

Article source: http://dealbook.nytimes.com/2012/10/31/pvh-to-buy-warnaco-group-for-2-9-billion/?partner=rss&emc=rss

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