Tommy Hilfiger bought for $3 billion

NEW YORK (AP) - Clothing maker Phillips-Van Heusen Corp. said Monday it has agreed to buy privately held Tommy Hilfiger in a cash-and-stock deal valued at about $3 billion, creating one of the world's biggest clothing companies.

Shares of Phillips-Van Heusen, which owns and markets the Calvin Klein brand, rose 12 percent during morning trading.

Phillips-Van Heusen, based in New York, said the combined company's revenue will total about $4.6 billion. The combination will allow Phillips-Van Heusen, which also owns the Izod and Arrow brands, to introduce some of its brands in international markets.

In a call with analysts, Phillips-Van Heusen CEO Emanuel Chirico said the new company will be "focused on international growth" and a "highly complementary company with iconic brands."

About 60 percent of the combined company's revenue will come from the U.S. and 40 percent will come from overseas, 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.

Fred Gehring will continue as CEO of Tommy Hilfiger, and also become CEO of Phillips-Van Heusen's international operations. He will also join the Phillips-Van Heusen board of directors.

The sale to Phillips-Van Heusen does not require a shareholder vote and is expected to close in Phillips-Van Heusen's second quarter.

PVH said it expects the deal to immediately help earnings by 20 cents to 25 cents per share, excluding one-time items, beginning in the current fiscal year ending Jan. 30, 2011.

It said the deal will help earnings by 75 cents to $1 in the fiscal year ending Jan. 29, 2012.

Phillips-Van Heusen expects to save $40 million annually as a result of the deal.

The deal includes approximately 1.9 billion euros in cash ($2.6 billion) and 276 million euros ($379.9 million) in Phillips-Van Heusen stock.

Phillips-Van Heusen will also assume 100 million euros ($137.6 million) in liabilities.

A group led by the buyout firm Apax Partners acquired Tommy Hilfiger in May 2006 for about 1.2 billion euros. It said it has invested more than 400 million euros in the business, increased the number of employee by more than 1,000 and the number of stores to 1,002 from 574.

Shares rose $5.84, or 12.2 percent, to $53.55 Its stock has traded between $16.38 and $48.78 over the past year

____

AP Business Writer Michelle Chapman in New York contributed to this story.