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Transaction Values Warnaco at $2.9BN – a 34%
Premium Over its Last Closing Price
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Reunites the House of “Calvin Klein” to Ensure Single Brand
Vision
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PVH Will Have Established Operations in Every Major Consumer
Market Worldwide
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Acquisition Enhances PVH’s Long-Term Growth and Profitability
Driven by “Calvin Klein” and “Tommy Hilfiger”
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Transaction Accretive to Year One Earnings by $0.35 Per Share,
Excluding One-Time and Transaction Related Costs
NEW YORK--(BUSINESS WIRE)--Oct. 31, 2012--
PVH Corp. (NYSE: PVH) and The Warnaco Group, Inc. (NYSE: WRC) today
announced that they have entered into a definitive merger agreement
pursuant to which PVH will acquire Warnaco and holders of Warnaco common
stock will receive $51.75 in cash and .1822 of a share of PVH common
stock for each share of Warnaco common stock. The transaction values
Warnaco at approximately $2.9 billion. With over $8 billion in pro forma
revenue, PVH will be one of the largest and most profitable global
branded lifestyle apparel companies in the world, with a diversified
portfolio of iconic brands led by Calvin Klein and Tommy
Hilfiger, as well as heritage brands – Van Heusen, IZOD, ARROW,
Bass, Speedo, Olga and Warner’s.
Based on PVH’s last closing stock price, the per share value of the
consideration to be received by Warnaco stockholders is $68.43, a 34%
premium over the last closing price of Warnaco common stock. The merger,
which has been unanimously approved by the Boards of Directors of both
companies, is expected to close in early 2013, at which time the former
Warnaco stockholders will own approximately 10% of the outstanding
common stock of PVH. In addition, Helen McCluskey, Warnaco’s President
and Chief Executive Officer, is expected to join PVH’s Board of
Directors. The Warnaco Board of Directors has unanimously recommended
that Warnaco stockholders approve the transaction.
PVH anticipates approximately $100 million of annual run rate synergies
from the transaction, which will be fully realized over three years. In
order to achieve these synergies, PVH expects to incur one-time costs of
approximately $175 million over three years. PVH expects the transaction
to be $0.35 per share accretive to earnings in the first full year
(fiscal 2013, if the deal closes when currently anticipated), excluding
one-time integration costs and transaction expenses but including the
effect of the potential loss of a license. When the $100 million of
expense synergies are fully realized in year 3, PVH would expect the
transaction to be accretive to earnings by $1.00 per share, excluding
one-time integration costs and including the effect of the potential
loss of a license.
“This is a unique opportunity to reunite the ‘House of Calvin Klein’
and reinforces our strategy to drive the global growth of Calvin
Klein,” said Emanuel Chirico, Chairman and Chief Executive Officer
of PVH. “Having direct global control of the two largest apparel
categories for Calvin Klein – jeans and underwear – will allow us
to unlock additional growth potential of this powerful designer brand
across all major product categories, geographies and distribution
channels. The Warnaco Calvin Klein businesses will be moved onto
our Calvin Klein platform under the leadership of Tom Murry, President &
Chief Executive Officer, Calvin Klein, to ensure a single brand vision
globally.”
Helen McCluskey, President and Chief Executive Officer of Warnaco, said,
“This transaction delivers compelling value to our stockholders and
significant benefits for the combined company. We are proud of what we
have accomplished, driving growth and profitability and increasing our
share price by roughly 500% since our restructuring in 2003. Our team
has built a strong global infrastructure, expanded our
direct-to-consumer footprint and created a solid foundation for
long-term growth. We look forward to the opportunities this combination
brings to the continued success of Calvin Klein Jeans and Calvin
Klein Underwear, the increased potential for our heritage brands,
and the future for our associates.”
“PVH has a proven track record of successfully integrating acquisitions.
We are confident this transaction will create tremendous value for
stockholders, as well as provide enhanced opportunities around the world
for both companies’ respective associates, vendors and other business
partners,” said Mr. Chirico. “We plan to align Warnaco’s established
operations in Asia and Latin America with our strong operations in North
America and Europe to fuel our growth strategies for both Calvin Klein
and Tommy Hilfiger. We remain firm in our belief that the
strength of our brands, the sound execution of our business strategies,
and our strong credit profile will continue to drive long-term growth
and improvements in our financial performance and business returns in
2013 and beyond.”
The closing of the transaction is subject to customary conditions,
including approval by the holders of a majority of the outstanding
shares of Warnaco common stock and approval under applicable antitrust
and competition laws. Commitments for $4.325 billion of financing
(consisting of a bridge credit facility and a senior secured credit
facility) have been received from Barclays, BofA Merrill Lynch and
Citigroup Global Markets Inc. subject to customary conditions. The
facility will be used to refinance debt, fund the cash portion of the
consideration, pay other transaction related expenses, and provide
liquidity for PVH going forward.
Third Quarter and Full Year 2012 Guidance
PVH Corp. currently expects its non-GAAP earnings per share for the
third quarter and full year 2012 to be at least at the top end of its
guidance range previously announced on October 2, 2012.
Warnaco plans to report its third quarter 2012 earnings results on
Monday, November 5, 2012. While its reported results of operations are
not yet final, Warnaco expects third quarter net revenues of
approximately $612 million and expects third quarter earnings per share
from continuing operations in line with analyst consensus expectations.
Warnaco is also reaffirming its previously announced fiscal 2012
guidance, excluding any one-time costs related to the transaction
announced today.
Advisors
Peter J. Solomon Company is serving as lead financial advisor to PVH in
connection with the acquisition and financing of the transaction and
sole advisor to the PVH Board of Directors, and provided a fairness
opinion to PVH. Wachtell, Lipton, Rosen & Katz is serving as legal
advisor to PVH.
Barclays, BofA Merrill Lynch and Citigroup Global Markets Inc. will
arrange and lead the financing for the transaction. Barclays, BofA
Merrill Lynch and Citigroup also acted as financial advisors to PVH.
J.P. Morgan is serving as exclusive financial advisor to Warnaco, and
provided a fairness opinion to Warnaco. Skadden, Arps, Slate, Meagher &
Flom LLP is serving as legal advisor to Warnaco.
Conference Call and Webcast Details
PVH will provide further details regarding this announcement on a
conference call and webcast with the investment community scheduled for
Wednesday, October 31, 2012 at 8:30AM Eastern Time. The webcast can be
accessed at www.pvh.com
via the PVH News Announcement icon or dial 888-205-6743 in the
U.S. or 913-312-0413 (toll) from outside the U.S., using passcode number
1476035. Additional materials related to the transaction are available
under the Investors tab at www.pvh.com.
The live webcast of the Company’s presentation, as well as the audio
replay, which will be available beginning three hours after the
conference ends, may be accessed by logging onto www.pvh.com
by using the PVH News Announcement icon or going to the Webcasts
section under the Investors tab. Materials for this presentation will
also be available on www.pvh.com
in the Webcasts section under the Investors tab.
About PVH Corp.
PVH Corp., one of the world’s largest apparel companies, owns and
markets the iconic Calvin Klein and Tommy Hilfiger brands
worldwide. It is the world’s largest shirt and neckwear company and
markets a variety of goods under its own brands, Van Heusen, Calvin
Klein, Tommy Hilfiger, IZOD, ARROW, Bass and G.H. Bass & Co., and
its licensed brands, including Geoffrey Beene, Kenneth Cole New York,
Kenneth Cole Reaction, MICHAEL Michael Kors, Sean John, Chaps, Donald J.
Trump Signature Collection, JOE Joseph Abboud, DKNY, Ike Behar and
John Varvatos.
About Warnaco Group, Inc.
The Warnaco Group, Inc., headquartered in New York, is a leading global
apparel company engaged in the business of designing, sourcing,
marketing and selling men’s, women’s and children’s sportswear and
accessories, intimate apparel, and swimwear under such owned and
licensed brands as Calvin Klein®, Speedo®, Chaps®, Warner's® and
Olga®. For more information, visit www.warnaco.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements and information
about our current and future prospects and our operations and financial
results, which are based on currently available information. Actual
future results and financial performance could vary significantly from
those anticipated in such statements. The forward looking statements
include assumptions about our operations, such as cost controls and
market conditions, and the proposed merger (including its benefits,
results, effects and timing) that may not be realized.
Risks and uncertainties related to the proposed merger include, among
others: the risk that Warnaco’s stockholders do not approve the merger;
the risk that regulatory approvals required for the merger are not
obtained or are obtained subject to conditions that are not anticipated;
the risk that the other conditions to the closing of the merger are not
satisfied; potential adverse reactions or changes to business
relationships resulting from the announcement or completion of the
merger; uncertainties as to the timing of the merger; competitive
responses to the proposed merger; costs and difficulties related to the
integration of Warnaco’s businesses and operations with PVH’s business
and operations; the inability to obtain, or delays in obtaining, cost
savings and synergies from the merger; unexpected costs, charges or
expenses resulting from the merger; litigation relating to the merger;
the inability to retain key personnel; and any changes in general
economic and/or industry specific conditions. Additional factors that
could cause future results or events to differ from those we expect are
those risks discussed under Item 1A, “Risk Factors,” in PVH’s Annual
Report on Form 10-K for the fiscal year ended January 29, 2012,
Warnaco’s Annual Report on Form 10-K for the fiscal year ended December
31, 2011, Warnaco’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2012, and other reports filed by PVH and Warnaco with the
Securities and Exchange Commission (SEC). Please read our “Risk Factors”
and other cautionary statements contained in these filings. We undertake
no obligation to update or revise any forward-looking statements,
whether as a result of new information, the occurrence of certain events
or otherwise. As a result of these risks and others, actual results
could vary significantly from those anticipated in this press release,
and our financial condition and results of operations could be
materially adversely affected.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger discussed in this press release,
PVH will file with the SEC a Registration Statement on Form S-4 that
will include a Proxy Statement of Warnaco and a Prospectus of PVH, as
well as other relevant documents concerning the proposed transaction.
WARNACO STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND
THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES
AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL
AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION.
A free copy of the Proxy Statement/Prospectus, as well as other filings
containing information about PVH and Warnaco, may be obtained at the
SEC’s Internet site (http://www.sec.gov).
You will also be able to obtain these documents, free of charge, from
PVH at www.pvh.com
under the heading “Investors” or from Warnaco by accessing Warnaco’s
website at www.warnaco.com
under the heading “Investor Relations.”
PVH and Warnaco and certain of their directors and executive officers
may be deemed to be participants in the solicitation of proxies from the
stockholders of Warnaco in connection with the merger. Information about
the directors and executive officers of PVH and their ownership of PVH
common stock is set forth in the proxy statement for PVH’s 2012 annual
meeting of stockholders, as filed with the SEC on Schedule 14A on May
10, 2012. Information about the directors and executive officers of
Warnaco and their ownership of Warnaco common stock is set forth in the
proxy statement for Warnaco’s 2012 annual meeting of stockholders, as
filed with the SEC on Schedule 14A on April 11, 2012. Additional
information regarding the interests of those participants and other
persons who may be deemed participants in the transaction may be
obtained by reading the Proxy Statement/Prospectus regarding the merger
when it becomes available. This communication shall not constitute an
offer to sell or the solicitation of an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any
sale of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the requirements
of Section 10 of the Securities Act of 1933, as amended.
Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50460388&lang=en
Source: PVH Corp.
Investors:
PVH Corp.
Dana
Perlman
Treasurer, SVP Business Development & Investor Relations
danaperlman@pvh.com
(212)
381-3502 (temporarily unavailable)
(908) 698-5518
or
Warnaco
Deborah
Abraham
Vice President, Investor Relations
(212) 287-8289
or
Media:
PVH
Corp.
Meghan Gavigan /
Dan Gagnier / Jonathan
Doorley /
Nathaniel Garnick
Sard Verbinnen & Co
mgavigan@sardverb.com
(312)
895-4737 /
(212) 687-8080
or
Warnaco
Jeffrey
Taufield / Wendi Kopsick
Kekst and Company
(212) 521-4800
