Phillips-Van Heusen Has Agreed to Buy Calvin Klein

Phillips-Van Heusen Corp, the maker of Izod and Van Heusen shirts, has agreed to buy closely held clothing company Calvin Klein for $US430 million in cash and stock to build its designer business.

Phillips-Van Heusen would also give incentives based on future sales to Calvin Klein himself, valuing the transaction at as much as $US600 million, chief financial officer Emanuel Chirico said. Private equity firm Apax Partners helped finance the agreement.

Phillips-Van Heusen got its start in 1881 when a Polish immigrant began selling flannel shirts sewn by his wife to coal miners from a push cart. The purchase would help boost the cachet of the company, investors said. Phillips-Van Heusen's sales declined four of the past five quarters as consumer spending slowed and competition rose.

Calvin Klein Inc tried to sell itself three years ago for $US1 billion before pulling itself off the market several months later after talks with suitors such as Tommy Hilfiger Corp fell through. Phillips-Van Heusen's chief executive, Bruce Klatsky, initiated the talks about two years ago, Klein said.