SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 31, 1998
TOMMY HILFIGER CORPORATION
(Exact name of registrant as specified in its charter)
British Virgin Islands 1-11226 Not Applicable
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(State or other Commission File Number (IRS Employer
jurisdiction of Identification No.)
incorporation)
6/F, Precious Industrial Centre
18 Cheung Yue Street
Cheung Sha Wan
Kowloon, Hong Kong Not Applicable
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: 852-2745-7798
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On January 31, 1998, Tommy Hilfiger Corporation (the "Company"),
Tommy Hilfiger U.S.A., Inc., a wholly owned subsidiary of the Company, Tommy
Hilfiger (Eastern Hemisphere) Limited, a wholly owned subsidiary of the Company,
and Pepe Jeans London Corporation entered into a Stock Purchase Agreement
pursuant to which the Company will acquire Pepe Jeans USA, Inc. and Tommy
Hilfiger Canada Inc. A press release issued by the Company on February 1, 1998
relating to the proposed transaction is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit 99.1 Press Release issued by the Company on February 1,
1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: February 5, 1998
TOMMY HILFIGER CORPORATION
By: /s/ Benjamin M.T. Ng
_____________________________
Name: Benjamin M.T. Ng
Title: Executive Vice President -
Corporate Finance
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EXHIBIT LIST
Exhibit 99.1 Press Release issued by Tommy Hilfiger Corporation on
February 1, 1998.
Exhibit 99.1
[Letterhead of Tommy Hilfiger Corporation]
CONTACT: Ruth Pachman/Wendi Kopsick
Kekst and Company
(212) 521-4891/4867
Kathleen Gannon
Tommy Hilfiger U.S.A., Inc.
(212) 840-8888
FOR IMMEDIATE RELEASE
TOMMY HILFIGER TO ACQUIRE WOMEN'S, JEANS AND CANADA LICENSEES
--Transaction is Designed to Enhance Shareholder Value By Adding Powerful
Growth Platforms Already Established in Jeanswear, Womenswear and Canada--
HONG KONG, February 1, 1998 - Tommy Hilfiger Corporation (NYSE: TOM) today
announced that, acting upon the recommendation of a Special Independent
Committee of its Board of Directors, it has entered into a definitive agreement
to acquire Pepe Jeans USA, Inc. and Tommy Hilfiger Canada Inc. Pepe Jeans
develops, sources and markets Tommy Hilfiger Womenswear and Tommy Jeans in the
United States under license from the Company. Tommy Hilfiger Canada distributes
a wide range of the Company's products throughout Canada under license.
The value of the transaction is approximately $1.15 billion, consisting of
approximately $756 million in cash and approximately 9 million Tommy Hilfiger
Corporation ordinary shares. The transaction is expected to be meaningfully
accretive to earnings per share in the first year before giving effect to
one-time charges and will be accounted for as a purchase. The cash portion of
the purchase price will be funded from a combination of debt financing and cash
on hand.
Silas Chou, Chairman of the Company, said, "The integration of these
fast-growing businesses will add powerful platforms for the acceleration of the
Company's revenue and earnings per share growth rates and enhance the Company's
already strong
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competitive position in an ever-changing global brand environment. Over the last
five years, our strategy was to develop our core men's U.S. wholesale and retail
businesses and, through select licensing arrangements, to position Tommy
Hilfiger as a global lifestyle brand. During the same period, Pepe Jeans and
Tommy Hilfiger Canada have taken the women's, jeans and Canadian businesses
through what we believe was their risky and costly start-up phases and have
positioned them for significant revenue and profit growth. These timely and
complementary additions to our more established men's business are designed to
deliver enhanced shareholder value by providing great growth momentum to carry
us into the next millennium."
The women's, jeans and Canadian businesses are expected to have combined net
sales of approximately $430 million in the fiscal year ending March 31, 1998,
compared to approximately $229 million in fiscal 1997, an increase of 88%. Tommy
Hilfiger Womenswear's net sales are expected to be approximately $165 million in
fiscal 1998, compared to $72.3 million in fiscal 1997. The Tommy Jeans men's
line is expected to have approximately $200 million in net sales in fiscal 1998,
compared to $122.3 million in fiscal 1997. The Tommy Jeans young women's line is
scheduled to be introduced for Fall 1998. Tommy Hilfiger Canada's net sales are
expected to increase to approximately C$95 million in fiscal 1998 from C$50.3
million in fiscal 1997.
Joel Horowitz, Chief Executive Officer, commented, "By combining these
businesses, our shareholders should benefit from both accelerated top-line
revenue growth as well as bottom-line income. They provide a unique opportunity
for building greater shareholder value through further successful product
expansion, as well as a natural first step for us towards direct ownership and
control of established international distribution channels. By utilizing its
existing infrastructure and expertise to quickly ramp-up the Tommy women's and
jeanswear businesses, Pepe Jeans was able to establish significant footholds in
these segments while our competitors were also seeking to garner market share.
At the same time, Tommy Hilfiger Canada, our most successful geographic
licensee, constructed an expansive distribution network with
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leading department and specialty stores throughout Canada. We will now be well
positioned to capitalize on this strong foundation." Following the acquisition,
the divisional president of each acquired business will report directly to Joel
Horowitz.
As a result of the acquisition, affiliates of the Company's founding partners
and senior-most executives, Silas Chou, Lawrence Stroll, Tommy Hilfiger and Joel
Horowitz, will own approximately 19%, on a fully diluted basis, of the Company's
shares through their ownership of Pepe Jeans. These shares are subject to a
two-year lock-up agreement.
A Special Committee of Independent Directors, advised by independent legal and
financial advisors, reviewed and assisted in the negotiations of the transaction
and unanimously approved the acquisition. The transaction was also approved by
the Company's full Board of Directors.
"In light of the ownership interests of several of the Company's directors in
Pepe Jeans and Tommy Hilfiger Canada, the Company's Board established a Special
Committee to evaluate the fairness of the transaction to existing shareholders,"
said Simon Murray, Chairman of the Special Committee. "We recommend the proposed
acquisitions because the businesses have an attractive history of growth, and
the transaction is expected to be meaningfully accretive to the Company during
the first fiscal year."
The Company was advised by Morgan Stanley & Co. Incorporated and Wachtell,
Lipton, Rosen & Katz, while the Special Committee of Independent Directors was
advised by Wasserstein Perella & Co., Inc. and Chadbourne & Parke LLP. In
addition, Pepe Jeans was advised by Allen & Company Incorporated and Simpson
Thacher & Bartlett. Morgan Stanley and Wasserstein Perella have provided
fairness opinions to the full Board of Directors and the Special Committee,
respectively.
The Company will prepare and mail to its shareholders a proxy statement
including more detailed information on the transaction, and will seek approval
of the transaction
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at a special shareholder meeting. In addition to shareholder approval, the
transaction is subject to customary financing and regulatory conditions, and is
expected to be completed by late May 1998.
Tommy Hilfiger Corporation, through its subsidiaries, designs, sources and
markets men's sportswear and childrenswear under the Tommy Hilfiger trademark.
Through a range of strategic licensing agreements, the Company is expanding its
product lines to offer a broader array of apparel, accessories, footwear and
fragrance for men, women and children, as well as a home furnishings collection.
The Company's products can be found in leading department and specialty stores
throughout the United States, Canada, Europe, Mexico, Japan, Central and South
America and, commencing Spring 1998, the Far East.
In addition to the historical information contained herein, there are matters
discussed which are hereby identified as "forward-looking statements" for
purposes of the Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995. These forward-looking statements involve risks and
uncertainties, including, but not limited to, economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, products, services and prices.
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