NEW YORK — Maidenform Inc. is sweetening the pot for a potential acquisition of its stable of national brand foundations: Maidenform, Lilyette and Flexees.
WWD has learned that Maidenform, which in 2001 generated close to $250 million in sales, is said to have further lowered its asking price to around $110 million. That move, along with four new licensing agreements, apparently is rekindling a courtship between the 81-year-old matriarch of the bra world and its most ardent suitor: VF Corp.
A report last week in the New York Post indicated VF was in talks to buy Maidenform, although it wasn’t confirmed.
Contacted at Maidenform’s Bayonne, N.J., headquarters last week, Tom Ward, chief executive officer of the company, declined comment on any talks, but said the firm signed four new licensing pacts this month, which are expected to generate estimated combined annual wholesale revenues of more than $50 million. They are sports and maternity bras to be produced by Delta Galil USA; women’s slippers by SG Footwear; women’s socks by Dominion Hosiery, and bra accessories to be manufactured by Karen Carson Creations.
"Maidenform’s market share has definitely improved with our core customer base growing," he added.
The VF-Maidenform romance has had its ups and downs for seven years. In 1997, VF signed a letter of intent to purchase Maidenform, but the deal was aborted by both firms within a two-month time frame. Sources noted that the crux of the problem reportedly was a pension plan payoff of $8 million for Maidenform veterans, which both companies contested. A majority of Maidenform old-timers have since left the company.
Last year, Kellwood Co. also made a play for Maidenform. The thinking was it would have been a good fit since Kellwood does a tremendous private label business, and Maidenform’s strength was its brands. But talks were soon dropped because the "multiples didn’t add up," said several sources.
Sources familiar with Maidenform’s previous talks noted that the company’s asking price was too high for such a highly leveraged firm — as much as $180 million in 1997, $150 million in 1999 and $120 million in 2002.Howard Marks, chairman of Oaktree Capital Management, which owns Maidenform, said, "We don’t comment on individual stocks or investments." VF officials did not return phone calls last week.
Industry observers generally say that while Maidenform has survived through tough economic times, the window of opportunity to sell it may be beginning to close as the sour economy and lackluster sales at retail batter the apparel business. At several department stores, sales of national-name bras are down 8 percent against a year ago, according to sources.
As reported, Maidenform secured $60 million in asset-based financing in 1999 from GE Capital. In August 2002, Maidenform received a cash infusion by First Union Bank unit Congress Financial of $82.5 million and a $60 million revolving credit line in May 2001, secured by receivables and inventory. Additionally, a $7.5 million two-year loan by Congress Financial was secured by certain retail assets. At the time, the two major shareholders, GE Capital and Oaktree Capital, had agreed to make a $15 million cash investment in the company. Maidenform’s last reported debt load in 2001 was $50 million.
From a manufacturers’ viewpoint, Richard Murray, president of Wacoal America, the U.S. arm of apparel giant Wacoal Japan, said, "I’m not surprised if VF is interested again. And I’m not surprised that Oaktree would now want to sell Maidenform. It’s a highly leveraged company and it’s tough out there."
In fact, VF said last week as it announced first-quarter results that it expects future acquisitions to supply the majority of topline annual growth of 6 percent in the coming years. Of that 6 percent, acquisitions are expected to contribute between 3 and 4 percent.
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