Apax nets 4.5x on Tommy Hilfiger exit

The New York- and London-based firm is selling the clothing retailer to Phillips-Van Heusen for €2.2bn, after acquiring the company in 2006 for €1.2bn.

Apax Partners has made a 4.5 times return on its investment in clothing retailer Tommy Hilfiger, selling the company to Phillips-Van Heusen for €2.2 billion.

Phillips-Van Heusen, also a clothing retailer, is paying €1.9 billion in cash in the deal, and Apax will get €276 million worth of common stock in PVH. Also, PVH will assume about €100 million of Tommy Hilfiger’s liabilities.

Apax, based in New York and London, acquired Tommy Hilfiger in a take-private in 2006 valued at €1.2 billion. The firm made the investment from two funds – its €4.3 billion Europe Fund VI and its $856 million US Fund VII.

Apax had tried to take the retailer public in 2008, but pulled its public float of the company. “We got caught in the market downturn, especially the downturn in the retail segment in the market,” a spokesperson for Apax said. “We pulled [the public offering] because the market wasn’t with us.”

The firm has had an ongoing relationship with PVH. It acquired shares in the company in 2003 after providing financing for PVH’s acquisition of Calvin Klein, but sold its stake over the next few years.

“[PVH] is a company we know very well. The idea to acquire Tommy Hilfiger came out of our discussions with them,” the spokesperson said.

During Apax’s ownership period, Tommy Hilfiger acquired its Japanese licensee, entered into an exclusive department store distribution agreement with Macy’s in the US, sold its sourcing operation to Li & Fung and re-launched its e-commerce business in cooperation with D+S, another Apax portfolio company.

The company’s earnings before interest, taxes, depreciation and amortisation increased from €180 million to €256 million while Apax owned Tommy Hilfiger, while net debt decreased from about 4.3 times EBITDA to the current level of 1.5 times EBITDA. Also, the company has increased its employee base by more than 1,000 and the number of stores from 574 to 1,002.