Thursday September 25 8:45 PM EDT
Company Press Release
The Warnaco Group, Inc. Signs Definitive Merger and Exchange Agreements to Acquire
Designer Holdings Ltd. for Warnaco Stock
Warnaco to Acquire in a First Step Exchange A Majority of Designer Holdings Stock From New Rio, L.L.C.
NEW YORK, Sept. 25 /PRNewswire/ -- The Warnaco Group, Inc. (NYSE:WAC) and Designer Holdings Ltd. (NYSE:DSH) jointly announced that they have
entered into a definitive merger agreement for the previously announced acquisition of Designer Holdings by Warnaco.
Pursuant to the terms of the merger agreement, which was approved by the Board of Directors of both companies, all Designer Holdings shareholders will receive
.324 of a share of Warnaco common stock for each Designer Holdings share they own. The transaction is intended to qualify as a tax-free reorganization. Based
upon the average of the last eight trading days of Warnaco stock, the value to the Designer Holdings shareholders is approximately $11 per share. Following the
consummation of the merger, which is expected to take place by the end of the year, the shareholders of Designer Holdings would own approximately 16%, on a
fully-diluted basis, of Warnaco's shares outstanding.
In connection with this transaction, Warnaco has also entered into an exchange agreement to acquire, as a first step, for the same per share consideration as that to
be paid in the merger, all the shares of Designer Holdings owned by New Rio, L.L.C., which owns a majority of Designer Holdings' outstanding shares. Under the
terms of the Warnaco/New Rio exchange agreement, which is expected to close upon termination of the waiting periods for the exchange and the merger under the
Hart-Scott-Rodino Act, New Rio has agreed to support the merger and not to dispose of any of the Warnaco shares it receives in the exchange until the
Warnaco-Designer Holdings merger is consummated.
Upon the completion of the Warnaco/New Rio share exchange, Warnaco will be entitled to designate a majority of members to the Designer Holdings Board of
Directors.
The merger (but not the New Rio exchange) requires approval by a majority of the outstanding shares of Designer Holdings, which would be satisfied in light of
Warnaco's agreement to vote the Designer Holdings shares acquired from New Rio in support of the Warnaco-Designer Holdings merger. The merger (but not the
New Rio exchange) may also require approval by Warnaco stockholders to the extent such approval would be required by applicable New York Stock Exchange
requirements.
Linda J. Wachner, Chairman and Chief Executive Officer of Warnaco, said, ``The acquisition of Designer Holdings provides an excellent opportunity to build value
for our shareholders. We're extremely proud of our association with Calvin Klein. The Calvin Klein Jeans(R) and Khakis(R) brands are among the most highly
desired and successful labels in the jeanswear and casual sportswear marketplace, and complement Warnaco's existing product lines, including Calvin Klein(R)
underwear for men and women and Calvin Klein(R) men's accessories. We look forward to working with Arnold Simon to further the Calvin Klein Jeans(R) and
Khakis(R) businesses by aggressively pursuing new avenues for growth.''
Arnold Simon, President and Chief Executive Officer of Designer Holdings, said, ``Warnaco has established an outstanding record of building highly- recognized
consumer apparel brands. The Calvin Klein Jeans(R) and Khakis(R) businesses will benefit from this expertise and will be even better-positioned for long-term
growth. Moreover, by receiving Warnaco common stock, Designer Holdings shareholders will be able to participate in our future success.''
Lazard Freres & Co. has provided a fairness opinion to Warnaco, and Merrill Lynch & Co. has provided a fairness opinion to Designer Holdings.
The Warnaco Group, Inc. headquartered in New York, is a leading manufacturer of intimate apparel, menswear, and accessories sold under such brands as
Warner's(R), Olga(R), Valentino Intimo(R), Marilyn Monroe(R), Fruit of the Loom(R) bras, Van Raalte(R), Lejaby(R), Bodyslimmers(R), Chaps by Ralph
Lauren(R) and Calvin Klein(R) men's and women's underwear and men's accessories.
Designer Holdings Ltd. has a 40-year extendable license to develop, source and market designer sportswear collections under the Calvin Klein Jeans(R),
CK/Calvin Klein Jeans(R) and CK/Calvin Klein/Khakis(R) labels. Products for men, juniors, women and petites are distributed through a broad range of
department stores and specialty store.
The offering of Warnaco stock in the merger will be made only by means of a prospectus.
SOURCE The Warnaco Group, Inc. |
