What’s most impressive about the transaction from Klein’s perspective is the ability to continue to grow the Calvin Klein labels into big volume businesses in underdeveloped apparel categories, while also leaving him the personal room to focus on the big picture as a significant shareholder in PVH. The deal includes ongoing financial incentives tied to future sales of the Calvin Klein brand.
Klein and his longtime business partner Schwartz will each immediately pocket $215 million in cash and stock from the deal. Schwartz is expected to step back from the company but will consult to CKI.
The deal with PVH confirms a report in WWD Monday.
In an interview following the confirmation of a deal, Klein had his own take:“Let ’s put it this way,”he said, “I have a long-term emotional,as well as financial,in- terest in the success of this business.This has been my life.It ’s a company not just about me,but also a lot of in- credibly wonderful people.I care about this and I have a financial interest in seeing it do well.”
During a conference call earlier on Tuesday evening, PVH chairman and chief executive officer Br ce Klatsky had a lot to crow about as he revealed that his two-year pursuit of Calvin Klein Inc.had come to a successful con- clusion,considering the number and scope of competitors that have pursued the 34-year-old fashion house over the past several years.“This is,without a doubt,the greatest day of my business career,” Klatsky said on the call..
PVH — which said it expects CKI to have operating income of $40 million to $50 million next year — an- nounced Tuesday that it had signed a cash-and-stock deal to acquire the company for $430 million up front, with additional payouts of as much as $270 million in the coming years.PVH ’s first priorities for the brand, which will be set up as an independent division within PVH,headed by existing CKI president and chief oper- ating officer Tom Murry,will be to launch new women ’s and men ’s main floor sportswear lines.Klatsky said he believed those businesses were a $1 billion opportunity. He said on the conference call that about 60 percent of CKI ’s sales are domestic with the balance coming from abroad.He also said he saw sales overseas,particularly in Asia,as a key growth opportunity.