Byline: Evan Clark
Let the Hunt Begin: Cash-Rich Companies Eager to Make Deals
Fashion's game of deal or no deal is heating up for 2010 and it seems almost everyone is looking to play a part.
And although no one is predicting a return to the go-go days of 2006 and 2007 when buyers bid hot properties up into the stratosphere, experts said a steadier economy, easing credit markets and more realistic price tags could bring some sizzle to fashion's mergers and acquisitions scene this year.
"If we have a more benign, let's say slowly improving, environment, you're going to see a meaningful increase in the deal flow," predicted Joe Pellegrini, managing director of Robert W. Baird & Co.'s consumer retail team. "You'll see a lot of activity in that $200 million to $500 million zone."
The tenor of the market will recall the deal-making of the earlier part of the last decade, said Pellegrini, pointing to such strategic buys as VF Corp.'s acquisitions of The North Face and then Vans and Nike Inc.'s purchase of Converse.
And many of those same companies with cash, cash equivalents and short-term investments on their balance sheets or the ability to borrow enough for a purchase are headed back out on the hunt.
Among the companies publicly scouting or said to be on the prowl with at least some capital to be put to use are Nike ($3.63 billion in cash, cash equivalents and short-term investments on hand), PPR (1.27 billion euros, or $1.83 billion at current exchange), Li & Fung Ltd. ($1 billion), VF ($379.1 million), Phillips-Van Heusen Corp. ($356.6 million), Iconix Brand Group Inc. ($233.4 …