An Industry Shocker: Wal-Mart Said Eyeing A Tommy Hilfiger Bid

A new player has emerged in the stakes for Tommy Hilfiger Corp. in the form of the world's biggest retailer, Wal-Mart Stores Inc., sources said.

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Tommy Hilfiger on the runway in New York.

Photo By Thomas Iannaccone

A Hilfiger look for spring '06.

Photo By George Chinsee

NEW YORK — Wal-Mart Stores Inc. has emerged as a new player in the race for Tommy Hilfiger Corp.

Financial and industry sources said last week that Wal-Mart, the world's largest retailer, is believed to have initiated the idea and soon will start its due diligence analysis on Hilfiger, possibly by week's end.

Spokeswomen for Wal-Mart and Tommy Hilfiger declined comment. Bankers representing Tommy Hilfiger could not be reached. But such a deal would dramatically transform the Hilfiger brand away from its department store roots.

J.P. Morgan Chase & Co., working with Goldman Sachs, has been quietly shopping Tommy Hilfiger Corp. to potential buyers and is said to be concentrating its efforts on just a few companies, banking and industry sources said. Those firms include two financial players, one of which is Apax Partners. Bankers at Apax could not be reached for comment.

Marvin Traub, a retail consultant and former Bloomingdale's chairman and chief executive officer, said a Wal-Mart/Tommy marriage "would be interesting."

Traub, of the firm that bears his name, said a deal would "blow up [Tommy's] whole licensing program, because you can't be at Wal-Mart and sell Tommy Hilfiger licensed product to department stores. However, nothing is impossible."

Financial sources have said the asking price for Hilfiger is at least $1.82 billion, but could go as high as $2.16 billion and that a deal might be inked before Thanksgiving.

Banking sources and apparel executives, who spoke on condition of anonymity, said last week the timetable is still valid. One executive said the preference is to get a deal done quickly while valuations hold up.

Several bankers tracking the sale process on behalf of their clients said there was no formal prospectus, or "book," on Hilfiger. A banker not connected to J.P. Morgan Chase said a book wouldn't be necessary since the apparel firm was being shopped to just a handful of buyers. The presentations include a focus on Hilfiger's retail and European operations, the bankers said.

Bankers and other financial sources also said Hilfiger has generated substantial interest among financial and strategic players.

Some of the firms that have been contacted include Jones Apparel Group Inc., Perry Ellis International Inc. and Liz Claiborne Inc. Other names mentioned include Kellwood Co., Li & Fung USA and Phillips-Van Heusen Corp., banking sources said. However, Claiborne, Jones, Li & Fung, Kellwood and Perry Ellis are said to no longer be in the running.

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