PVH unites Calvin Klein lines in $ 2.8 b deal

Monday, 12 November 2012 00:00 - - {{hitsCtrl.values.hits}}

Clothing maker PVH Corp will unite Calvin Klein underwear, jeans and sportswear lines under one roof in a $2.8 billion deal to buy rival Warnaco Group Inc, the latest move in the consolidation of the apparel manufacturing industry.

The cash and stock deal also nets PVH Warnaco’s brands and licenses like Speedo and Chaps to go along with its Tommy Hilfiger, IZOD and Van Heusen brands.

“The deal is fairly priced and the combination makes a lot of sense strategically,” said Lauren Taylor Wolfe, managing director of Blue Harbour Group, which owns more than three percent of Warnaco’s shares. She said there are other revenue opportunities from the combination that have not been included in projections from PVH Chief Executive Emanuel Chirico and his team. The clothing manufacturing industry is seeing active consolidation, as bigger vendors buy up smaller players and licensees to gain more control over their brands, find more flexibility in operations and save money. VF Corp, another major player in the space, is known for constantly looking at bolt-on deals to add to its portfolio. PVH bought Calvin Klein in 2003 and makes formal and sportswear under that brand. Warnaco has held the licensing agreements for Calvin Klein jeans and underwear since 1997 and operates around 1,760 Calvin Klein retail stores worldwide.

The parties expect the deal to close in early 2013.