Apax Partners reaches definitive agreement to sell Tommy Hilfiger Group to Phillips-Van Heusen for €2.2 billion
15th March 2010Apax Funds advised by Apax Partners today announced a definitive agreement to sell Tommy Hilfiger Group to Phillips-Van Heusen Corporation for a total consideration Funds advised by Apax Partners today announced a definitive agreement to sell Tommy Hilfiger Group to Phillips-Van Heusen Corporation for a total consideration of approximately €2.2bn ($3.0bn), including €1.924bn ($2.6bn) in cash and €276m ($380m) in Phillips-Van Heusen common stock.
New York, NY, March 15, 2010 – Funds advised by Apax Partners today announced a definitive agreement to sell Tommy Hilfiger Group (or ‘the Company’) to Phillips-Van Heusen Corporation (NYSE: PVH) for a total consideration of approximately €2.2bn ($3.0bn), including €1.924bn ($2.6bn) in cash and €276m ($380m) in Phillips-Van Heusen common stock. In addition, PVH will assume €100m of liabilities.
In May 2006, funds advised by Apax Partners acquired the Company in a public-to-private transaction for €1.2bn ($1.6bn). In partnership with Apax, Tommy Hilfiger’s new management team redefined its strategy to reflect the brand’s global presence and premium brand positioning. Over the past four years, Tommy Hilfiger has acquired its Japanese licensee, entered into a ground breaking exclusive department store distribution agreement with Macy’s in the US, sold its sourcing operations to Li & Fung, re-launched its e-commerce business in cooperation with D+S, another Apax portfolio company, and consolidated its supplier base to enable the company to maintain profitable growth in challenging times.
During the period of the Apax Funds’ investment, EBITDA has increased from €180m to €256m and net debt in the business has decreased from around 4.3X EBITDA at entry to the current level of 1.5X EBITDA. Additionally, employee numbers have risen by more than 1,000, the number of stores has increased from 574 to 1,002 and more than €400m has been invested in the growth of the business.
John Megrue, CEO of Apax Partners US and co-head of the Apax Retail & Consumer team, commented: “Reviving the Tommy Hilfiger brand and restoring the company to profitable growth in partnership with CEO Fred Gehring and his team has been hugely satisfying for the Apax team. We are pleased that the company and brand are poised for continued growth under the stewardship of Phillips-Van Heusen, a company we know well as both a partner and prior major shareholder when we assisted PVH to acquire the Calvin Klein business.”
Christian Stahl, Partner, added: “Management was the key in bringing Tommy Hilfiger back to its old strengths. In 2006, the business was suffering in the US and had lost its clear positioning. We saw the strength of the international business and together with the management team developed a clear strategy for repositioning and restructuring the US business. We invested heavily for growth and were able to crystalize the inherent value in this iconic brand”
Fred Gehring, CEO of Tommy Hilfiger Group, said: “Apax Partners shared our belief in the underlying strength of this business at a very early stage. Their support and backing over the past four years as we gained momentum globally while rebuilding the business in North America, has been invaluable. Their depth of knowledge of the sector, coupled with their great operational insight and financial expertise allowed us to put the business in the position it is today. We’ve enjoyed working with them and now look forward to the next chapter in the Tommy Hilfiger story.”
Apax’s investment in Tommy Hilfiger reflects the depth of the firm’s retail sector expertise and its ability to identify and develop strong growth companies over the long-term. During its history, Apax funds have invested more than €2.4bn ($3.4bn) of equity in retail and consumer businesses globally, including in companies such as Phillips-Van Heusen, rue21, inc., New Look, Tommy Bahama, Dollar Tree Stores and Children’s Place. Apax provided the financing for Phillips-Van Heusen’s acquisition of Calvin Klein, Inc., which was completed in early 2003.
Christian Stahl will join the Phillips-Van Heusen board of directors.
Credit Suisse acted as lead M&A adviser to the Tommy Hilfiger Group and as the sole adviser to Apax Partners and Tommy Hilfiger management. Morgan Stanley and Citi acted as co-M&A advisers to the Tommy Hilfiger Group alongside Credit Suisse. Simpson Thacher & Bartlett and Stibbe acted as legal advisers for the Tommy Hilfiger business and Apax Partners. PwC acted as financial diligence adviser and Ernst & Young acted as tax adviser for Tommy Hilfiger.
Peter J. Solomon Company L.P. is acting as lead financial adviser to PVH in connection with the acquisition and the financing of the transaction and sole adviser to the PVH Board of Directors. Wachtell, Lipton, Rosen & Katz is serving as legal adviser to PVH.
Barclays Capital and Deutsche Bank, global debt coordinators, and Bank of America Merrill Lynch, Credit Suisse and RBC Capital Markets will arrange financing for the transaction. Barclays Capital, Deutsche Bank, Bank of America Merrill Lynch, and RBC Capital Markets also acted as financial advisers to PVH.
NOTES TO EDITORS
About Apax Partners
Apax Partners is one of the world’s leading private equity investment groups. It operates across the United States, Europe and Asia and has more than 30 years of investing experience. Funds under the advice and management of Apax Partners globally total approximately $40 billion. These Funds provide long-term equity financing to build and strengthen world-class companies. Apax Partners Funds invest in companies across its global sectors of Retail & Consumer, Tech & Telecom, Media, Healthcare and Financial & Business Services. For more information visit: www.apax.com.
About the Tommy Hilfiger Group
With a premium lifestyle brand portfolio that includes Tommy Hilfiger and Hilfiger Denim, The Tommy Hilfiger Group of Companies is one of the world’s most recognized designer apparel groups. The Group’s focus is designing and marketing high-quality menswear, womenswear, children’s apparel and denim collections. Through select licensees, the Group offers complementary lifestyle products such as accessories, fragrances and home furnishings. Tommy Hilfiger Group merchandise is available to consumers worldwide through an extensive network of dedicated retail stores, leading specialty and department stores and other carefully controlled distribution channels. On September 17, 2009, the Tommy Hilfiger Corporate Foundation announced a $2 million donation to Millennium Promise, a non-profit organization founded in 2005 to help end extreme poverty. The partnership with Millennium Promise celebrates the Foundation's globalization of its philanthropic mission to held build a healthy and civil society by supporting education, physical well-being and cultural programs. For additional information about the Tommy Hilfiger Group of Companies, please visit www.tommy.com.
About Phillips-Van Heusen Corporation
Phillips-Van Heusen Corporation is one of the world's largest apparel companies. It owns and markets the Calvin Klein brand worldwide. It is the world's largest shirt and neckwear company and markets a variety of goods under its own brands, Van Heusen, Calvin Klein, IZOD, ARROW, Bass and G.H. Bass & Co., and its licensed brands including Geoffrey Beene, Kenneth Cole New York, Kenneth Cole Reaction, unlisted, A Kenneth Cole Production, BCBG Max Azria, BCBG Attitude, MICHAEL Michael Kors, Sean John, Chaps, Donald J. Trump Signature Collection, JOE Joseph Abboud, Tommy Hilfiger, DKNY, and Timberland.
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