MERGER MAY FIRM UP APPAREL SALES.
Authentic Fitness Corp., the maker of Speedo and other swimwear, has agreed to merge with a New York apparel and intimate wear manufacturer in an all-stock transaction.
The Van Nuys company, which is in the midst of moving to the City of Commerce, will become a subsidiary of The Warnaco Group. Each common share of Authentic Fitness will be converted into 0.82 of Warnaco stock.
The merger has to be approved by shareholders, whose meetings are scheduled for the fall.
Warnaco officials said consolidations arising from the merger should save both companies $20 million in administrative and production costs.
Warnaco declined to comment on any layoffs. Authentic Fitness employs 2,000 people, including 150 in Van Nuys and 480 in Commerce.
Analysts believe the merger will benefit both companies in a competitive apparel market.
``Authentic Fitness is a dynamic company and will help Warnaco grow in the future,'' said Walter Loeb, analyst and president of Loeb Associates in New York. ``It consolidates management. Linda (Wachner) has been the chief executive of both companies. This brings both companies back under one roof.''
Wachner and a partner acquired Warnaco in a 1986 leveraged buyout.
At the time, Authentic Fitness was a division of Warnaco.
The parent company sold Authentic Fitness to Wachner and a group of investors in 1990 to raise money and pay down Warnaco's debt. Wachner became the chairman and CEO of both companies.
Authentic Fitness went public in 1992.
Under Wachner's leadership, both companies began to shape up.
Warnaco continued to pay down debt and acquired brand-name operations, including Calvin Klein's intimate apparel and men's underwear business. Other Warnaco brands include Warner's, Valentino Intimo and Chaps by Ralph Lauren.
``The intimate apparel business is difficult, but Warnaco is maintaining or improving its market share,'' said Jay Meltzer, an analyst at Johnson Redbook Service in New York. ``It is also coming up with some excellent new brands.''
To expand its swimwear line, Authentic Fitness bought Catalina and Cole of California. The company also opened 106 Speedo retail stores.
``The expansion of the stores will continue,'' Loeb said. ``Authentic Fitness is, today, recognized as a major factor in many of the malls.''
In 1995, Warnaco had $916 million in sales. That's up from $625 million in 1992. Authentic Fitness had $266 million in revenues, up 162 percent from 1992.
While Warnaco's entire board of directors unanimously voted in favor of the merger, there was a lone dissenter among Authentic Fitness' directors.
R. Stephen Rubin, chairman of Pentland Group PLC of England and the largest shareholder of Authentic Fitness, declared himself against the merger.
Rubin could not immediately be reached for comment.
|Printer friendly Cite/link Email Feedback|
|Publication:||Daily News (Los Angeles, CA)|
|Article Type:||Statistical Data Included|
|Date:||Jul 17, 1996|
|Previous Article:||INDUSTRIAL PRODUCTION GAINS STABILIZE ECONOMY.|
|Next Article:||INTEL REPORTS SURGING PROFITS, BUCKING INDUSTRY'S DOWNTURN.|
|Beyond Competition: The Economics of Mergers and Monopoly Power.|
|WARNACO CANCELS MERGER : AUTHENTIC FITNESS EARNINGS BELOW WHAT WAS EXPECTED.|