WASHINGTON - The Federal Trade Commission said Monday it has given Fruit of the Loom the green light to buy CK Calvin Klein jeans - and Fruit of the Loom finally confirmed it is talking about a deal.
Reports that Fruit of the Loom was a top contender to buy the Calvin Klein jeans business have been circulating since mid-April.
Contacted Monday about the FTC approval - a routine procedure when deals might have possible antitrust consequences - a Fruit of the Loom spokeswoman said, "The two companies are talking," but declined further comment. She noted that Fruit of the Loom is having its annual meeting today in Chicago, but gave no hint as to whether an announcement of the deal would be made there.
Barry Schwartz, chairman fo Calvin Klein Inc., could not be reached for comment.
In approving a potential deal, the FTC found that a marriage of the two operations would not be anticompetitive. Under the Hart Scott Rodino Act, federal review is required if a deal involves acquisition of at least $15 million worth of assets or securities, and one party has at least $100 million in annual sales or assets and the other has at least $10 million.
Fruit of the Loom, which has built its business on underwear and casualwear, moved into the jeanswear business in March with the acquisition of the Gitano Group. Gitano products, however, are aimed at the mass market, while the CK jeanswear has a department and specialty store orientation.
Earlier this year, Calvin Klein was negotiating a deal to sell the jeans business to Rio Sportswear. A letter of intent was signed for Rio to buy the business, covering both men's and women's jeans, for about $35 million plus ongoing royalty payments, but the deal reportedly collapsed due to personality differences between the designer and Arnold Simon, president of Rio.
The Calvin Klein jeans business has been a leader in the designer denim field. It began under a licensing pact with Puritan Fashion Corp. in 1978, and by 1983 -- when Klein and Schwartz bought Puritan -- sales had reached about $220 million. However, a year or so later, sales had dropped to about $130 million. The business currently is said to account for most of the estimated $150 million done by the designer's CK label, which also covers bridge sportswear, but Klein officials have declined to reveal figures.
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