Tommy Hilfiger firm bought for $1.6bn

Four months after it put itself up for sale, clothing company Tommy Hilfiger Corporation agreed to accept a $1.6bn (€1.3bn) or 16.80 dollars a share, cash bid from Apax Partners, a private investment company.

Hilfiger, known for its red, white and blue logo that resembles a signal flag in sailing regattas, expects the deal to close by Spring 2006 subject to shareholder approval.

While Apax did not detail its plans for Hilfiger, which went public in 1992 and is traded on the New York Stock Exchange, the firm is expected to be taken private. It is seen operating as a private company focused on expanding overseas and keeping its brand relevant in the United States.

Apax’s offer for the clothing designer is a 5% premium to Hilfiger’s Thursday closing stock price of 16 dollars on the New York Stock Exchange. Hilfiger shares were off 7 cents at 15.93 dollars in afternoon trading after the news.

Apax Partners operates in the US, Europe, Israel and Asia, and has invested in private and public companies, among them Phillips-Van Heusen, Tommy Bahama, and the Children’s Place.

“This is an exciting new phase in our evolution as a global lifestyle company … in addition to ensuring the strength of the Tommy Hilfiger brand at the higher end of the spectrum, we can continue to move ahead with the already successful global expansion,” Tommy Hilfiger, the company’s founder and principal designer, said in a statement today.

Hilfiger, who introduced the company’s first clothing line in 1984, plans to remain actively involved in the company. He entered an employment agreement in which he will continue as principal designer and chairman of the company’s strategy and design board after the deal closes.

Hilfiger, through its subsidiaries, designs and markets men’s, women’s and children’s clothing. The company’s brands include Tommy Hilfiger and Karl Lagerfeld.

In a report about Hilfiger published last month, analysts at JPMorgan Chase & Co said “despite recent improvements, sell-through performance remains unhealthy compared to its peers. Recent management changes and the exit into a turnaround remains murky, and we see potential of the brand’s sustained decline.”

The report noted that Hilfiger’s European wholesale business should continue to deliver sales growth, but cautioned that “its recent growth will likely slow over time”.

Apax manages 20 billion dollars worth of investments and one of its co-founders, Alan Patricof, helped finance Apple Computers Inc. and America Online when they were just start-up businesses.