PVH Plans to Leverage PVH Asia to Fuel Tommy Hilfiger China
Expansion
NEW YORK--(BUSINESS WIRE)--Feb. 2, 2016--
PVH Corp. [NYSE:PVH] and funds advised by Apax Partners announced today
that they have entered into a definitive agreement for PVH to acquire
the 55% interest in TH Asia Ltd., their joint venture for Tommy Hilfiger
in China, that PVH did not already own. The purchase price for the
transaction is approximately $172 million, net of cash of approximately
$100 million, subject to adjustment. The closing, which is subject to
customary closing conditions and regulatory approvals, is expected to
occur early in the second quarter of 2016 and is expected to be slightly
accretive to PVH’s 2016 earnings on a non-GAAP basis.
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This transaction has been envisioned since PVH and the funds advised by
Apax Partners established the Tommy Hilfiger China joint venture in
connection with the Tommy Hilfiger acquisition in 2010. The other
shareholders in the joint venture include an affiliate of Silas Chou
and, indirectly through an investment vehicle controlled by funds
advised by Apax Partners, members of Tommy Hilfiger management at the
time of the acquisition in 2010, such as Fred Gehring (former Chief
Executive Officer and Executive Chairman, Tommy Hilfiger and current
Vice Chairman, PVH), Daniel Grieder (Chief Executive Officer, Tommy
Hilfiger), and Mr. Tommy Hilfiger. Since 2012, the first full year of
operations after the joint venture acquired the Tommy Hilfiger China
business from the former licensee, the Tommy Hilfiger business in China
has doubled from approximately $70 million in revenue to a projected
$140 million in revenue for 2015 with over 350 stores, of which 65 are
directly operated.
Emanuel Chirico, Chairman and Chief Executive Officer, PVH Corp.,
commented: “Today’s announcement represents a significant development
for our Company as we continue to execute against our key strategic
priorities and demonstrates our commitment to making strategic
investments to support the long term growth of PVH and our Tommy
Hilfiger business. This transaction enables the Tommy Hilfiger business
to directly operate its fastest growing market, while leveraging our
well-established infrastructure in Asia, our regional leadership
expertise and strong brand momentum across both our Tommy Hilfiger and
Calvin Klein businesses in the region.”
Daniel Grieder, Chief Executive Officer, Tommy Hilfiger, commented: “We
are looking forward to executing a more fully integrated strategy for
China that takes advantage of our current momentum in the region. This
will allow us to further realize the growth opportunities that exist for
the brand by offering consumers a greater breadth of Tommy Hilfiger product
lines and a more elevated brand presentation. Building on our strong
existing regional foundation, we plan to accelerate the growth of the
Tommy Hilfiger business by increasing our brand marketing in China and
capitalizing on our strong market positioning and price, value
proposition. We plan to invest further in driving the expansion of the
brand through new store openings (both company-operated and franchised
stores) and improved productivity in existing stores, while rapidly
expanding our traditional and digital marketing initiatives to further
reinforce the brand in this exciting market.”
Richard Zhang, Equity Partner & Head of Greater China, Apax Partners,
commented: “As a leading global investor in the fashion and consumer
space, Apax has been privileged to partner with PVH to build the Tommy
Hilfiger China joint venture and management team, leading to a
significant expansion of the business. As a result of these efforts and
the work of the management team, Tommy Hilfiger has become one of
the fastest growing and most profitable fashion brands in China. We
thank PVH for its partnership and believe that PVH will take this iconic
brand to its next height in China.”
Christian Stahl added: “We are pleased to complete another successful
transaction with PVH, following PVH’s acquisitions of Calvin Klein and
Tommy Hilfiger in 2003 and 2010, respectively. This sale to PVH of the
Apax funds’ stake successfully completes the exit from the 2006
investment in Tommy Hilfiger. We wish our partners at PVH and at Tommy
Hilfiger continued success.”
PVH Corp., one of the world’s largest apparel companies, owns and
markets the iconic Calvin Klein and Tommy Hilfiger brands
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, Tommy Hilfiger, IZOD, ARROW, Warner’s and Olga, and
its licensed brands, including Speedo, Geoffrey Beene, Kenneth Cole
New York, Kenneth Cole Reaction, MICHAEL Michael Kors, Sean John and Chaps.
Apax Partners is a leading global private equity advisory firm. Over its
more than 30 year history, Apax Partners has raised and advised funds
with aggregate commitments of $38 billion*. Funds advised by Apax
Partners invest in companies across four global sectors of Tech and
Telco, Services, Healthcare and Consumer. These funds provide long-term
equity financing to build and strengthen world-class companies. As a
leading global investor in the fashion and consumer space, the Apax
funds’ recent fashion investments include Cole Hann, Karl Lagerfeld, and
FULLBEAUTY brands. For further information about Apax Partners, please
visit www.apax.com.
* Funds raised since 1981, commitments converted from fund currency to
USD at FX rates as at September 2015.
PVH CORP. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995: Forward-looking statements made in this press
release, including, without limitation, statements relating to PVH
Corp’s (the “Company”) earnings, future plans, strategies, objectives,
expectations and intentions, are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements are
inherently subject to risks and uncertainties, many of which cannot be
predicted with accuracy, and some of which might not be anticipated,
including, without limitation, (i) the Company’s plans, strategies,
objectives, expectations and intentions are subject to change at any
time at the discretion of the Company; (ii) the Company may be
considered to be highly leveraged, and uses a significant portion of its
cash flows to service its indebtedness, as a result of which the Company
might not have sufficient funds to operate its businesses in the manner
it intends or has operated in the past; (iii) the levels of sales of the
Company’s apparel, footwear and related products, both to its wholesale
customers and in its retail stores, the levels of sales of the Company’s
licensees at wholesale and retail, and the extent of discounts and
promotional pricing in which the Company and its licensees and other
business partners are required to engage, all of which can be affected
by weather conditions, changes in the economy, fuel prices, reductions
in travel, fashion trends, consolidations, repositionings and
bankruptcies in the retail industries, repositionings of brands by the
Company’s licensors and other factors; (iv) the Company’s plans and
results of operations will be affected by the Company’s ability to
manage its growth and inventory; (v) the Company’s operations and
results could be affected by quota restrictions and the imposition of
safeguard controls (which, among other things, could limit the Company’s
ability to produce products in cost-effective countries that have the
labor and technical expertise needed), the availability and cost of raw
materials, the Company’s ability to adjust timely to changes in trade
regulations and the migration and development of manufacturers (which
can affect where the Company’s products can best be produced), changes
in available factory and shipping capacity, wage and shipping cost
escalation, and civil conflict, war or terrorist acts, the threat of any
of the foregoing, or political and labor instability in any of the
countries where the Company’s or its licensees’ or other business
partners’ products are sold, produced or are planned to be sold or
produced; (vi) disease epidemics and health related concerns, which
could result in closed factories, reduced workforces, scarcity of raw
materials and scrutiny or embargoing of goods produced in infected
areas, as well as reduced consumer traffic and purchasing, as consumers
become ill or limit or cease shopping in order to avoid exposure; (vii)
the failure of the Company’s licensees to market successfully licensed
products or to preserve the value of the Company’s brands, or their
misuse of the Company’s brands and (viii) other risks and uncertainties
indicated from time to time in the Company’s filings with the Securities
and Exchange Commission.
Risks and uncertainties related to the acquisition include, among
others: the risk that the regulatory approval required for the
acquisition is not obtained or is obtained subject to conditions that
are not anticipated; the risk that the other conditions to the closing
of the acquisition are not satisfied; uncertainties as to the timing of
the acquisition; competitive responses to the acquisition; the inability
to obtain, or delays in obtaining, cost savings and synergies from the
acquisition; unexpected costs, charges or expenses resulting from the
acquisition; litigation relating to the acquisition; the inability to
recognize the expected benefits of the acquisition; the inability to
integrate the acquired business without disruption to the acquired
business or existing operations; and any changes in general economic
and/or industry specific conditions.
The Company does not undertake any obligation to update publicly any
forward-looking statement, whether as a result of the receipt of new
information, future events or otherwise.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160202006231/en/
Source: PVH Corp.
PVH Corp.:
Dana Perlman,
212-381-3502
Treasurer and Senior Vice President, Business
Development & Investor Relations
investorrelations@pvh.com
or
Tommy
Hilfiger:
Abdel El Hamri, 212-548-1728
Senior
Vice President, Marketing & Communications, the Americas and SVP, Global
Communications
Abdel.ElHamri@tommy.com
or
Apax
Partners:
Alex Wessendorff, +44 20 7872 6461
Communications
Manager
alex.wessendorff@apax.com
