Apax Banks 4.5x on Tommy Hilfiger, Invests in PVH Again
Contrary to conventional wisdom, brands really can travel uphill. Apax Partners' successful ownership of apparel company Tommy Hilfiger is living proof. When the buyout firm took Tommy Hilfiger private in 2006, Tommy-branded apparel was being sold by warehouse outlet stores at deep discounts. Apax saw value in its international operations, and plunked down $450 million in equity for a total deal value of $1.6 billion. The firm promoted Fred Gehring from head of Europe to CEO, and embarked on two years of intense turnaround execution. Apax and Tommy's management sold its distribution business, acquired of licensees and aggressively expanded stores. Furthermore, Apax helped return Tommy Hilfiger to its status as a higher-end apparel brand by cutting back lower-end distribution and improving product quality. Ebitda increased by 42 percent under Apax's ownership, and debt fell from 4.3x Ebitda to 1.5x. That all happened in a matter of two years.
