- U.K. private equity firm to exercise option to sell stake
- PVH weighs IPO of Tommy Hilfiger China as soon as next year
Apax Partners, one of Europe’s largest private equity firms, plans to sell its stake in Tommy Hilfiger’s China operations to joint-venture partner PVH Corp., people with knowledge of the matter said.
Apax, which owns about half of the China venture, is exercising an option to sell its holding to PVH and should complete the transaction by the end of the year, according to the people. The terms of the deal would give the China venture an equity value of about $500 million, the people said, asking not to be identified because the information is private.
PVH, the owner of the Tommy Hilfiger brand, is considering an initial public offering of the China operations as early as next year after buying Apax’s stake, one of the people said.
“Although China’s economic slowdown has had a negative impact on the performance of luxury brands, the midrange and light luxury brands still sell quite well,” Hannah Li, a senior analyst at UOB Kay Hian Ltd. in Hong Kong, said by phone. “The trend may continue as average incomes keep rising.”
An agreement would end Apax’s nine-year association with the fashion brand. The firm took Tommy Hilfiger Corp. private in May 2006 in a deal valued at about $1.6 billion. In March 2010, the buyout firm sold most of the company to PVH, a deal valued at $3 billion, while retaining a stake in the China operations.
Consumer companies have been involved in a record $1.5 trillion of acquisitions globally this year, up from $1.2 billion the same period in 2014, according to data compiled by Bloomberg. Megadeals announced this year include Anheuser-Busch InBev NV’s proposed $109 billion purchase of SABMiller Plc, the maker of Foster’s and Castle lager, and Kraft Foods Group Inc.’s $55 billion merger with H.J. Heinz.
PVH, which also owns consumer brands including Calvin Klein and Speedo, reported $8.24 billion of sales in the most recent financial year, according to the Bloomberg-compiled data. Global revenue from Tommy Hilfiger was $3.58 billion last year, accounting for about 43 percent of PVH sales.
A spokesman for Apax declined to comment, while representatives for PVH didn’t immediately respond to requests for comment.