PVH Corp. – PVH – To Acquire Warnaco – WRC

PVH Corp. (NYSE: PVH) and The Warnaco Group, Inc. (NYSE: WRC)  announced that they have entered into a definitive merger agreement pursuant to which PVH will acquire Warnaco (WRC) 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 WRC.

The transaction values WRC 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.

• Transaction Values Warnaco at $2.9BN – a 34% Premium Over its Last Closing Price
• Reunites the House of “Calvin Klein” to Ensure Single Brand Vision
• PVH Will Have Established Operations in Every Major Consumer Market Worldwide
• Acquisition Enhances PVH’s Long-Term Growth and Profitability Driven by “Calvin Klein” and “Tommy Hilfiger”
• Transaction Accretive to Year One Earnings by $0.35 Per Share, Excluding One-Time and Transaction Related Costs

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.

About PVH Corp.- PVH

PVH Corp., one of the world’s largest apparel companies, owns and markets the iconic Calvin Klein and Tommy Hilfiger brands worldwide.

About Warnaco Group, Inc. – WRC

The Warnaco Group, Inc., (WRC) 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®.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.