Calvin Klein parent to buy Tommy Hilfiger

March 16, 2010 at 12:00a.m.

Associated Press

NEW YORK

Two iconic American clothing labels — preppy Tommy Hilfiger and Calvin Klein, known for its modern aesthetic — are coming together under one roof after Phillips-Van Heusen said it will purchase Tommy Hilfiger for about $3 billion in cash and stock.

The deal adds a prominent brand to Phillips-Van Heusen’s stable, which also includes Izod and Arrow. It’s expected to help Phillips-Van Heusen introduce some of its brands overseas, where 65 percent of Hilfiger’s business is generated.

Apparel analysts expect the Hilfiger brand to expand further beyond its stronghold in Europe into Asia and South America, while bolstering its U.S. business.

“I think it is a bold, strategic move to establish Phillips-Van Heusen on the global playing field,” said Peter Brown, vice chairman of Kurt Salmon Associates. “For Tommy Hilfiger, it is a great payday for management that has done a phenomenal job with the brand.”

Andrew Jassin, co-founder of apparel consultant Jassin-O’Rourke Group LLC, said that it’s the biggest deal ever in terms of gross dollars spent on a clothing brand.

Phillips-Van Heusen, based in New York, said the combined company’s revenue will total about $4.6 billion.

With the acquisition, Phillips-Van Heusen becomes the world’s fourth-largest apparel company, from its No. 10 ranking, based on stimated revenue this year.

About 60 percent of the combined company’s revenue will come from the U.S., and 40 percent will come from overseas, Phillips-Van Heusen CEO Emanuel Chirico said. About 45 percent of revenue will be wholesale, 45 percent retail and 10 percent licensing.

Tommy Hilfiger will remain in his role as principal designer, setting the vision for the Tommy Hilfiger brand.