PVH to Buy Warnaco Group for $2.9 Billion

LONDON - The fashion company PVH Corp. agreed on Wednesday to acquire Warnaco Group in a $2.9 billion deal, bringing various Calvin Klein brands under one corporate umbrella.

Under the terms of the deal, PVH, whose brands include Calvin Klein and Tommy Hilfiger, said it would offer shareholders in Warnaco $51.75 in cash and 0.18 of a share in PVH for each of their shares in Warnaco, the New York-based apparel company that controls the Calvin Klein jeans and underwear licenses.

The combined cash-and-stock deal is worth $68.43, a 34 percent premium on Warnaco's closing stock price on Friday. Trading in New York was closed on Monday and Tuesday because of Hurricane Sandy.

The acquisition would give Warnaco's shareholders a combined 10 percent stake in the enlarged company, according to a PVH statement.

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

PVH acquired the Calvin Klein brand in 2003. The deal gave the company control over the design and product development for the Calvin Klein brands. Warnaco holds the licensing agreements for the brand's jeans and underwear divisions.

The acquisition of Warnaco comes two years after PVH acquired the Tommy Hilfiger brand for $3 billion. The deal gave the American company, which also owns Arrow and Izod and licenses others brands such as Geoffrey Beene and Kenneth Cole New York, greater access to the European market.

PVH said it expected $100 million of annual cost savings by the third year after the deal is completed. The apparel company said it would incur $175 million of one-off costs related to these activities.

The deal for Warnaco is expected to close early next yea r.

Peter J. Solomon, Barclays, Bank of America Merrill Lynch and Citigroup, and the law firm Wachtell, Lipton, Rosen & Katz advised PVH, while JPMorgan Chase and the law firm Skadden, Arps, Slate, Meagher & Flom advised Warnaco.