Byline: Karyn Monget

NEW YORK — The Warnaco Group, as scheduled, took over controlling interest of Designer Holdings Ltd. late Tuesday, and some fast changes were made.
As the first step in gaining total ownership of the maker of Calvin Klein jeans, Warnaco acquired the 51.3 percent stake held in DH by New Rio LLC, a holding company owned by Arnold H. Simon and Charterhouse Group International. Simon is president and chief executive officer of DH.
The final step in cementing the deal will be the DH shareholder vote on Dec. 12 to turn over the remaining 48.7 percent.
Following the operation with New Rio, Linda J. Wachner, chairman, president and ceo of Warnaco, headed via telephone a DH board meeting from the Warnaco offices at 90 Park Ave., during which two DH directors resigned: A. Lawrence Fagan, president and chief operating officer of Charterhouse, and Debra Simon, who also stepped down as DH executive vice president. Simon is Arnold Simon’s wife.
Wachner also becomes chairman of the DH board, which, however, will be in existence only until the acquisition is completed on Dec. 12. Until then, three DH directors continue: Arnold Simon; Peter Brown, who also is ceo of Heather Hill Sportswear, and Merril M. Halpern, ceo of Charterhouse. Halpern had been DH chairman.
Three other Warnaco directors will also serve on the short-lived DH board: William S. Finkelstein, Warnaco’s senior vice president and chief financial officer; Andrew G. Galef, chairman of The Spectrum Group, and Joseph A. Califano Jr., chairman and president of The National Center on Addiction and Substance Abuse at Columbia University.
As reported, the deal will give Warnaco. with total sales last year of $1.06 billion. roughly one-third of the $2.5 billion Calvin Klein worldwide business. Warnaco already wields a hefty piece of the action with its Calvin Klein men’s underwear and accessories and women’s innerwear businesses, with sales last year of $302.4 million. DH’s sales last year were $480.3 million, with some $470 million of that coming from its Calvin Klein business.
As reported, the deal calls for an exchange of 0.324 Warnaco share for each DH share. Based on the Warnaco trading price, the value of the exchange has declined slightly since the pact was completed. When the definitive agreement was signed on Sept. 25, Warnaco stock on the New York Stock Exchange closed at 33 7/16. On Tuesday, the closing was 31 13/16, down 1/16.
With the DH purchase, Warnaco, which makes intimate apparel and men’s sportswear, will diversify its product base to include designer jeanswear under three labels: Calvin Klein Jeans, CK/Calvin Klein Jeans and CK/Calvin Klein/Khakis. It will have the designer’s jeans license for men, women and children in North and South America. Arnold Simon will be president and ceo of a new Warnaco division, to be called Calvin Klein Jeans Co. Danny Gladstone will continue as president of the Calvin Klein Jeans brands, Wachner said.
In a telephone interview Tuesday, Wachner discussed some plans for Warnaco’s new business. “We are going to be expanding the product line…we are in charge of making sure that product by Calvin Klein will be amplified by us,” she said.
Asked whether she or the designer will call the shots on the jeanswear ads — known for provocative and edgy appeal — Wachner replied: “Calvin will continue to do the advertising. He’s done a terrific job. He is in charge of choosing the ads.”
On distribution, Wachner noted, “We will treat it the same way as Calvin Klein Underwear. Distribution will remain the same and will be aimed at department and specialty stores.

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