Pump Up the Volume: Tommy Shares Leap on Sale Frenzy

Shares of Tommy Hilfiger Corp. surged 10.92 percent, or $1.76, to close at $17.87 on the NYSE Thursday, on news the company is for sale.

NEW YORK — Shares of Tommy Hilfiger Corp. surged 10.9 percent Thursday on news the company is for sale.

WWD broke the story that Hilfiger was seeking a buyer on the newspaper's Web site Wednesday evening.

Investors pushed the company's stock price up by $1.76 to close at $17.87 Thursday on the New York Stock Exchange. More than 5.7 million shares changed hands, which is well ahead of the stock's average trading volume of 531,078. Shares of Hilfiger reached a 52-week high in intraday trading, climbing to $18.76. Its 52-week low is $8.47.

The stock was the third-highest price gainer on the NYSE Thursday. The company's market capitalization jumped $140 million, climbing to $1.64 billion from $1.5 billion on Wednesday. There are approximately 91.77 million shares outstanding and the stock's price-to-earnings ratio is 15.14.

The asking price on Hilfiger is at least $1.82 billion, but could go as high as $2.16 billion, according to financial sources. And designer Tommy Hilfiger is expected to get $250 million in cash as a buyout of his contract. J.P. Morgan Chase is the investment adviser. The company could not be reached for comment on Thursday, and the bank did not return calls for comment. The six analysts covering the stock did not release any reports at press time.

Li & Fung USA is one of the companies mentioned by several financial sources as a possible buyer for Hilfiger. The company is a sourcing firm that is now focusing more on global brand management. The parent company is Hong Kong-based Li & Fung Ltd., which earlier this year projected $10 billion in revenues by 2007, compared with $6.1 billion in 2004.

Jones Apparel Group also is being discussed as a potential buyer. In 2003, Jones held exploratory talks with Hilfiger and, while those talks didn't result in a deal, Jones is believed to have had contact again with Hilfiger recently, according to industry and financial sources.

A third company is Liz Claiborne, another apparel giant whose name, along with Jones, is frequently mentioned as a potential buyer of consumer brands.

A portfolio manager last month said he believed that "Liz and Hilfiger" also had an exploratory discussion. He observed Wednesday that targeting a strategic buyer means that "of course you go to Jones, Liz and VF Corp. Who else would you go to? You've got a very limited pool of strategic buyers who can do this kind of deal." Because of this, the portfolio manager believes Hilfiger could end up with a financial buyer as its new parent, noting that the private-equity groups have a "significant amount of money" that still needs to be invested somewhere.

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