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PVH Corp. To Acquire Warnaco Group (PVH, WRC)

New York City-based apparel company PVH Corp. (NYSE: PVH) today announced that it entered into a definitive agreement to acquire The Warnaco Group Inc. (NYSE: WRC) in a cash and stock deal valued at $2.9 billion. The announcement sent shares of both PVH and WRC higher in trading today.

Under the terms of the agreement, Warnaco’s shareholders will receive $51.75 in cash and 0.1822 of a share of PVH common stock for each share of Warnaco common stock they hold. The acquisition will make PVH one of the largest and most profitable global branded lifestyle apparel companies in the world, with more than $8 billion in pro forma revenue.

PVH expects approximately $100 million of annual run rate synergies from the transaction, which will be fully realized over three years.

Commenting on the transaction, Emanuel Chirico, Chairman and CEO of PVH, said that this is a unique opportunity to reunite the House of Calvin Klein and reinforces the company’s strategy to drive the global growth of Calvin Klein. Chirico said that having direct global control of the two largest apparel categories for Calvin Klein will allow the company to unlock additional growth potential of the powerful designer brand across all major product categories, geographies and distribution channels.

The transaction is expected to be $0.35 per share accretive to PVH’s earnings in the first full year (fiscal 2013 if the deal closes when expected). The transaction has been unanimously approved by the Board of Directors of both companies.

PVH also said that it expects its non-GAAP earnings per share for the third quarter and full year 2012 to be at the top end of its guidance range, which was announced on October 2, 2012.

PVH shares hit a 52-week high of $112.47 in trading today on news of the acquisition. At last check, the stock was trading 19.54% higher at $109.38.

WRC shares are also soaring today. At last check, the stock was trading 38.72% higher at $70.58.

 


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