NEW YORK — A sale of Tommy Hilfiger Corp. is getting closer, and Apax Partners Inc. is in the lead.
But the private equity firm isn’t flying solo — it has two teammates in its slipstream in Phillips-Van Heusen Corp. and Fred Gehring, chief executive officer of Tommy Hilfiger Europe.
On the heels of an Apax-PVH-Gehring bid is an offer from Oaktree Capital Management, according to financial sources. On Wednesday, details of the bids were sketchy. But as previously reported in WWD, first-round bids for Hilfiger were due last week.
Several financial sources said Wednesday that a deal for Hilfiger would happen soon. No acquisition price was mentioned, but banking and fund managers said the Apax-PVH-Gehring scenario would likely fetch a higher price than if Apax or another financial player went solo on the deal. A straight financial play would put the price tag of Hilfiger at around $15 a share, while an Apax-PVH-Gehring deal could garner as much as $20 to $22 a share.
With 91.77 million shares outstanding, the higher bid places the purchase price between $1.84 billion and $2.01 billion.
At $22 a share, the price represents a seven times multiple of adjusted pretax earnings. Acquisitions of fashion and retail firms have been averaging a multiple of between 6.5 and seven times over the course of this year, which has been one of the busiest ever. In the first nine months of 2005 there have been 395 deals, which is more than the total number of transactions for the full year in either 2001, 2002 or 2003.
Regarding Tommy Hilfiger’s employment contract, sources said it would be bought out for $150 million. It’s unclear if Hilfiger would have a role in the acquired company or just collect a percentage on sales of branded goods, as in his current employment contract. Hilfiger’s current agreement pays him between $14 million and $18 million a year.
Shares of Hilfiger jumped in Wednesday trading on the New York Stock Exchange, closing up 5.7 percent at $17.75, approaching a 52-week high. The shares have risen about 90 percent year-over-year. The increase Wednesday came despite Hilfiger reporting, after the market closed, its second-quarter results, which showed its U.S. wholesale volume fell 37 percent during the period.
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