Speedo Safe After PVH Acquisition of Warnaco
For now, Los Angeles–based Speedo USA is staying in town after the swimwear brand’s parent company, Warnaco Group Inc., was acquired by PVH Corp. for $2.9 billion.
Emanuel Chirico, PVH’s chairman and chief executive, said he was pleasantly surprised to see how Speedo had grown over the past few years under the leadership of Jim Gerson, named president of Speedo USA in 2010.In an Oct. 31 conference call announcing the acquisition, Chirico said PVH has no intention of selling Speedo right now. “When we started to do the due diligence, we were pleasantly surprised by the strength of the Speedo business,” he said. “It is a very marketable asset. But clearly at this moment in time, we’re looking for ways to help them grow that business, invest in that business and that brand, and take it forward.”
Speedo USA, which licenses the name from Speedo International Ltd. in England, has experienced good revenue growth in the last few years.
In fiscal 2011, Speedo USA saw its wholesale revenues hit $229.3 million, up 5.4 percent from 2010, when they were $217.5 million.
The Speedo brand is a dominant label in competitive swimming, worn by U.S. swimmer Michael Phelps, who won eight gold medals in the 2008 Olympic Summer Games in Beijing and 10 gold medals during the 2012 Olympic Summer Games in London.In 2011, athletes wearing Speedo products won two world records at the World Championships in Shanghai. Some 58 percent of all medals won at the event were won by swimmers wearing Speedo suits.
Warnaco also makes Calvin Klein swimwear, in a licensed deal, out of its Los Angeles office. Calvin Klein swimwear saw its wholesale revenues climb to $27.8 million in fiscal 2011, up 18.6 percent from the previous year, when they were $23.49 million.
Warnaco’s other owned and licensed brands are Olga, Warner’s and Chaps.
Many analysts and investment bankers weren’t surprised to see the acquisition. It had been in the rumor mills for three to four years. “I think when it happened, it wasn’t a huge surprise for anyone,” said Paul Zaffaroni, director of investment banking at Roth Capital Partners.
Helen McCluskey, president and chief executive officer of Warnaco, is expected to join PVH’s board of directors.
Calvin Klein on the move
In his conference call, Chirico said all of Warnaco’s licensed Calvin Klein businesses, including the labels for Calvin Klein Jeans and Calvin Klein underwear, will be moved to PVH’s purview.
PVH, formerly known as Phillips-Van Heusen, purchased the Calvin Klein brand in 2003. The brand is under the leadership of Tom Murry, president and chief executive of Calvin Klein.
“This is a unique opportunity to reunite the ‘House of Calvin Klein’ and reinforce our strategy to drive the global growth of Calvin Klein,” Chirico said.PVH believes that in three years, the merger will help it save $100 million in operating costs.
The deal is expected to close in early 2013. Holders of Warnaco common stock will receive $51.75 in cash and .1822 of a share of PVH common stock for each share of Warnaco common stock.
Based on PVH’s last closing stock price, the per-share value of the consideration to be received by Warnaco stockholders is $68.43, a 34 percent premium over Warnaco’s last per-share closing price.When the acquisition is completed, Warnaco stockholders will own about 10 percent of PVH’s outstanding stock.
PVH’s other brands include Van Heusen, Tommy Hilfiger, Izod, Arrow, Bass and G.H. Bass & Co. Its licensed brands include Geoffrey Beene, Kenneth Cole New York, Sean Jean and Donald J. Trump Signature Collection. —Deborah Belgum
