By  on January 12, 1994

NEW YORK -- Tracking expansion opportunities under its new management, London Fog Corp. said Tuesday that it will merge with Pacific Trail to bolster its position in women's, men's and children's outerwear.

The merged company will continue to be called London Fog, with Pacific Trail, based in Seattle, becoming a division.

"This is the first major step in the ongoing growth and revitalization of London Fog," said Arnold P. Cohen, who has been chairman and chief executive officer of the Eldersburg, Md.-based rainwear and outerwear giant since July. Before that, he was president of J. Crew Group.

"We see an opportunity to strengthen and grow Pacific Trail, a regional brand, which has had a stronger following in the Northwest where it started," he added.

Cohen projected revenues for the merged company at around $500 million in 1994. Pacific Trail, a $60 million firm, is a private firm controlled by GKH Partners.

London Fog, a $350 million firm, is controlled by Merrill Lynch Capital Partners, which also controls Ann Taylor Stores Corp. and Pathmark Stores, among other companies.

"We're looking at businesses to merge with or acquire, to continue to strengthen London Fog," Cohen said. "There may be some outside the outerwear market. The Pacific Trail merger sets a clear tone to how we think about our business."

Compared with London Fog, Pacific Trail has a more active and youthful appeal, reflecting its Northwest roots. Its prices are moderate to lower moderate; London Fog's are moderate to upper moderate.

According to Cohen, Pacific Trail will maintain "a significant presence in Seattle," including the design and merchandising teams and the children's wear division. He said he wants to keep alive "the creative spirit on the West Coast that's very different from the East Coast." Asked whether some of Pacific Trail's operations could be moved to Maryland, Cohen declined comment. He also declined to comment on plans for Ron Epperson, president of Pacific Trail. Reached in Seattle, Epperson said his plans have not been decided.

Specifics of the transaction were not disclosed. It's a stock swap, under which Merrill Lynch will hold a majority stake in the combined company's common equity and GKH Partners. Management of London Fog and Pacific Trail will also have ownership in the company.

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