Sanjay Lalbhai-controlled Arvind has finalised a deal to buy out 49% stake jointly held by the Murjani Group and the US-based private equity fund Matrix Partners in Calvin Klein India for close to 100 crore, said three persons close to the transaction.
The deal will help the denim major widen its ties with its existing joint venture partner American clothing giant Phillips-Van Heusen Corp for Tommy Hilfiger brand.
Phillips-Van Heusen Corp also owns Calvin Klein worldwide.
The negotiations, which started last year, culminated in a transaction five days ago and a formal announcement is expected soon, said one of the persons quoted above. Ambit Corporate Finance was the sole advisor to the deal. While a spokesperson for Arvind declined to comment, the head of Murjani Group Vijay Murjani and Matrix Partners did not respond to telephone calls and text messages. While the Murjani Group holds 25% in the joint venture, Matrix holds the rest 24%. The deal also signals Arvind Group’s founder Sanjay Lalbhai’s ambition to grow in the mid-premium segment of the apparel market by forging alliances with marque overseas brands.
It all started in 2003 when Arvind struck a joint venture with Murjani Group to sell Tommy Hilfiger in India. Though the worldwide ownership of Tommy Hilfiger moved to Phillips-Van Heusen, Arvind continued to be the Indian partner. Two years ago, Arvind acquired the business operations of British fashion retailer Debenhams, Next and American lifestyle brand Nautica in India from Ramesh-Tainwala-led Planet Retail.
Though the move was an attempt to boost market share in kidswear, womenswear and sportsware segments, the economic downturn triggered a sharp fall in customer purchases, leaving some retail brands struggling. Experts feel that these alliances allowed Arvind to consolidate brands under a single umbrella and offer a one-stop platform for aspirational customers.
“These joint ventures not only bring marque brands under a single platform, but also help Arvind to negotiate better for retail space. Instead of negotiating for a single brand, the company can now look at having more brands in a retail mall by paying lesser rents,” said Harminder Sahani, founder and managing director, Wazir Advisors, a consultancy firm for retail and lifestyle companies.
Despite the fallout of recession, the company’s brands business grew by 25% in the last nine-month period to 1,412 crore. The company’s profit before tax and interest from brands business grew by 17% to 34.7 crore in the last nine months. The company’s brands include Excalibur, Flying Machine, Colt and Newport.