Van Heusen to pocket Hilfiger for $3 bn

Clothing maker Phillips-Van Heusen said on Monday it has agreed to buy privately held Tommy Hilfiger in a cash-and-stock deal valued...

Clothing maker Phillips-Van Heusen said on Monday it has agreed to buy privately held Tommy Hilfiger in a cash-and-stock deal valued at about $3 billion,creating one of the worlds biggest clothing companies. Shares of Phillips-Van Heusen,a New York clothing retailer which owns and markets the Calvin Klein brand,rose more than 4 per cent in premarket trading. The deal includes approximately 1.9 billion euros in cash ($2.6 billion) and 276 million euros ($379.9 million) in Phillips-Van Heusen stock.

Phillips-Van Heusen will also assume 100 million euros ($137.6 million) in liabilities. A group led by the buyout firm,Apax Partners,acquired Tommy Hilfiger in May 2006 for about 1.2 billion euros. It said it has invested more than 400 million euros in the business,increased the number of employees by more than 1,000 and the number of stores to 1,002 from 574.

Phillips-Van Heusen,based in New York,said the combined companys revenue will total about $4.6 billion. The combination will allow Phillips-Van Heusen to introduce some of its brands in international markets,Phillips-Van Heusen said.

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Tommy Hilfiger will remain in his role as principal designer,setting the vision for the Tommy Hilfiger brand. Fred Gehring will continue as CEO of Tommy Hilfiger,and also become CEO of Phillips-Van Heusens international operations. He will also join the Phillips-Van Heusen board of directors. Phillips-Van Heusen shares rose $1.85,or 3.9 per cent,to $49.59 in premarket trading.

The sale to Phillips-Van Heusen does not require a shareholder vote and is expected to close in Phillips-Van Heusens second quarter. The company said it expects the deal to immediately help earnings by 20 cents to 25 cents per share,excluding one-time items,beginning in the current fiscal year ending Jan. 30,2011. It said the deal will help earnings by 75 cents to $1 in the fiscal year ending Januray 29,2012. Phillips-Van Heusen expects to save $40 million annually as a result of the deal.