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PVH to buy Calvin Klein underwear maker Warnaco

PVH, which owns the brand, aims to bring all its Calvin Klein apparel lines under one roof. The $2.9-billion deal awaits approval from regulators and Warnaco shareholders.

November 01, 2012|By Shan Li, Los Angeles Times

Nothing is coming between Calvin Klein and its underwear.

Retail giant PVH Corp., which produces some Calvin Klein clothing products, said that it will acquire Calvin Klein underwear maker Warnaco Group Inc. in a $2.9-billion deal. The aim is to bring all of its Calvin Klein apparel lines under one roof.

PVH, owner of ready-to-wear brands including Calvin Klein, Arrow and Tommy Hilfiger, said in a statement that the acquisition would boost combined sales at the company to $8 billion. Warnaco currently produces Calvin Klein underthings under license.

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

Other brands held by PVH include Van Heusen, Izod and swimsuit maker Speedo.

PVH is offering $51.75 in cash and 18.22% of one PVH share for each Warnaco share. That represents a 34% premium on the Friday closing price, with Warnaco shareholders to hold a stake of about 10% in PVH after the deal is completed.

The boards of both companies have approved the deal, which is awaiting regulatory approval and a vote from Warnaco shareholders.

Wall Street loved the proposed deal. Shares of PVH rose $18.49, or 20.21%, to $109.99 in trading Wednesday. Warnaco shares jumped $19.70, or 38.72%, to $70.58.

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