The FINANCIAL — Phillips-Van Heusen, that owns Calvin Klein, announced on March 15 that it agreed to buy Tommy Hilfiger B.V. in a deal valued at about $3 billion.
According to BBC, the 2.2bn euros (£2bn;$3bn) deal will create one of the world's largest clothing companies with $4.6bn revenue.
Market Watch informs that Tommy Hilfiger is expected to generate revenue of about $2.25 billion in the year ending March 31, with about two-thirds of the total coming from outside of the U.S.
With the acquisition, Phillips-Van Heusen, which also owns Arrow and Izod and licenses brands like Geoffrey Beene and Kenneth Cole New York, will seek to take advantage of Tommy Hilfiger’s strong European distribution channels for its own products, The New York Times reports. Despite Tommy Hilfiger’s reputation as a quintessentially American clothier, two-thirds of the company’s business is based in Europe.
The deal includes the assumption of 100 million euros ($138 million) in liabilities, Phillips-Van Heusen said, according to the same source. The chief executive of Phillips-Van Heusen, Emanuel Chirico, said in a statement that the acquisition was “ a unique opportunity to bring together two premier companies, each with iconic brands.” “Tommy Hilfiger fits all of our acquisition criteria: a strong brand, superior management, highly profitable, immediately accretive to earnings, and focused on international growth,” Chirico said.
Phillips-Van Heusen has gained 17 percent in New York Stock Exchange composite trading this year and rose 7 cents to $47.74 on March 12, the last day the stock traded. The New York-based company has a market value of about $2.5 billion, Bloomberg reports.
Tommy Hilfiger could add 30 cents a share in profit in its first year, JPMorgan Chase & Co. analysts Christopher Kim and Brian Tunick wrote in a March 9 research note. The company has a strong European business, which could be used to help bolster the non-Calvin Klein brands at Phillips-Van Heusen, the New York-based analysts wrote, according to the same source. Phillips-Van Heusen’s Arrow and Izod brands generate little or no revenue in that region, they said.
BBC reports that the eponymous founder, Tommy Hilfiger, will remain involved with the company as its principal designer and visionary for the brand.
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