WARNACO-DH NEARING DEFINITIVE AGREEMENT
Byline: Karyn Monget
NEW YORK — A definitive agreement between The Warnaco Group and Designer Holdings is expected to be reached Friday, said Linda J. Wachner, Warnaco’s president, chairman and chief executive officer.
As reported, Warnaco signed an agreement in principle last week to take over the $470-million-a-year Calvin Klein designer jeans business at Designer Holdings.
The purchase price will be $11 share in Warnaco stock. Based on 32.2 million Designer Holdings shares outstanding, the transaction should come to around $354 million. The deal should close in early December.
“Both sides — Warnaco and Designer Holdings — have extended the timing to get all of the paperwork done, and we expect a definitive agreement to be forthcoming,” said Wachner Tuesday in a telephone interview.
“I’m hoping we will make an announcement Friday, if we get the paperwork done in time. This is not about negotiations; it’s just about finishing a massive amount of paperwork,” said Wachner.
Asked if the Calvin Klein company was embracing the Warnaco-DH merger, Wachner replied: “This isn’t a deal between us and Calvin Klein; it’s a deal with us and Designer Holdings….I haven’t spoken to anyone at Calvin Klein since last week.”
Designer Holdings has a 40-year extendable license to develop, source and market sportswear under the Calvin Klein Jeans, CK/Calvin Klein Jeans and CK/Calvin Klein/ Khakis labels.
As for why the Calvin Klein camp has not publicly endorsed the Warnaco-DH marriage — as a matter of fact, the Klein company has maintained stony silence — Wachner mused, “Maybe they’re just waiting for a deal to be completed.”
The addition of the Calvin Klein Jeans business would give Wachner control of one-third of the $2.5 billion Calvin Klein cartel. That degree of control reportedly concerns Klein executives.
Wachner already holds the Calvin Klein men’s underwear and accessories and women’s innerwear businesses, which ran up sales last year of $302.4 million.
Warnaco shares closed at 34 3/8, up 15/16, while Designer Holdings shares closed at 9 3/4, down 1/16, in trading Tuesday on the New York Stock Exchange.