Wrangler set to acquire new jeans brand, ladies'' activewear lines

28 Jul 2007

Mumbai: Apparel manufacturing company VF Corporation has agreed to acquire an upmarket jeans business and a women''s activewear company for a combined value of $885 million.

VF, whose brands include Lee and Wrangler jeans, said it would pay $885 million for the two companies, using cash, borrowings.

VF''s other businesses include sportswear and imagewear. Its brands include Lee and Wrangler jeans, Eagle Creek outdoor wear and Nautica clothing.

VF said it will buy denim designer company Seven For All Mankind LLC from Bear Stearns Merchant Banking for $775 million and pay around $100 million for private equity-backed sportswear label Lucy Activewear Inc.

VF Corp. expects the acquisition of Seven For All Mankind, and Lucy Activewear together to drive sales growth of 15 to 20 per cent a year over the next five years.

The two brands will form a new division within the company called VF Contemporary Brands with over $350 million in annual revenues. The portfolio of lifestyle brands in the division is expected to grow over time, the company said.

Bear Stearns, which invested close to $100 million for a 50 per cent stake in Los Angeles-based Seven For All Mankind a little over two years ago, will roughly triple its money in the deal.

The other half is owned by L''Koral Inc., a company controlled by the company''s founder, Peter Koral.

Seven jeans are sold at specialty boutiques and at luxury retail stores such as Barneys New York, Neiman Marcus and Saks Fifth Avenue. The company is growing 15 per cent annually and now generates $300 million of revenue, according to VF.

Under Bear Stearns'' ownership, the firm expanded organically, broadening its offerings to include non-denim products like shirts and tops, a line of bags and a licence for women''s and men''s shoes.

Seven is also planning its first retail store, which is expected to open in November.

VF''s smaller acquisition, Portland, Ore.-based Lucy Activewear, has about $57 million of revenue and is expected to report a small loss this year. Private equity and venture capitalist firms, including Lone Pine Capital, Maveron LLC, Oak Investment Partners and Sutter Hill Ventures are the main owners of Lucy. Women''s wear retailer Chico''s FAS also holds a minority stake in the business.

Both the acquisitions are expected to close in August.