New Year Brings New Breed of Acquisitions

The apparel industry can expect another busy year of mergers and acquisitions.

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Tracy Evans Ltd., a $300 million predominately moderate vendor, is ready to make bigger leaps. Tracy Evans received the license for Harvé Benard last year, after Wellington Capital Partners acquired the better business, giving Tracy Evans an entree into the better market. Since then it has acquired Star City, a moderate junior brand, for between $6 million and $7 million. The New York firm is looking to expand its portfolio with companies that do at least $50 million in volume.

At the end of 2006, Rousso Apparel Group, a predominately moderate firm, partnered with a private investment arm of Li & Fung to acquire better-bridge brand GarfieldMarks. In 2007, the Rousso-LF team plans to make additional acquisitions, which will expand Rousso's better-plus segment beyond the quarter it now contributes to the $200 million business. Michael Hsieh, president of LF USA Investments Inc., an investment arm of Li & Fung, said he and Rousso planned to make additional deals for brands that do $10 million to $50 million in revenue and cost $3 million to $10 million in transaction.

"We are looking for companies with strong marketing and product management who leverage off our operations and financial base," Rousso said. "Our goal is to acquire companies that have owned brands and brand equity. We feel brands are the future and key to the survival in the industry. We are not limited to a specific market, but would focus on companies in the better, bridge and contemporary arena."

Wellington Capital Group, which bought Harvé Benard Ltd. for $12 million in September, is open to buying "anything," as long as it does at least $50 million in wholesale volume, according to ceo Joseph Gabbay. "We have the money to spend. It's just a matter of finding the right deal," he said.

Hilco Consumer Capital LLC is another firm that hopes to leverage the confidence it has gained from a recent deal into future acquisitions. After acquiring Apparel Holdings Group (which does in excess of $200 million), which it renamed CJ Apparel Group, at the beginning of this year, the Toronto company is "very eager" to buy two or three more companies this year, according to James Salter, Hilco's ceo. "Revenues, or licensed revenues, must have a minimum of $250 million at retail," Salter said, adding, "Most important for us, though, is brand."

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