PVH Corp., one of the world's largest apparel companies, and funds advised by Apax Partners have entered into a definitive agreement for PVH to acquire the 55 per cent interest in Tommy Hilfiger 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, PVH said in a press release. 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.
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.
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.
“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,” commented Emanuel Chirico, chairman and chief executive officer, PVH Corporation.
“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,” said Daniel Grieder, chief executive officer, Tommy Hilfiger.
“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 capitalising 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,” he added.
Richard Zhang, equity partner and head of Greater China, Apax Partners, said: “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.” (RKS)
Fibre2Fashion News Desk – India