Liz Claiborne Inc., one of the largest fashion apparel companies in the United States, bought the clothing manufacturer Ellen Tracy yesterday for $170 million, plus the assumption of $10 million in debt, The New York Times reports.
Ellen Tracy, a working partnership between Herbert Gallen, the chief executive, and his wife, Linda Allard, the chief designer, had sales last year of $171 million.
The acquisition brings Liz Claiborne—which had sales of $3.45 billion last year—up a notch in prestige, analysts reportedly said, landing a manufacturer that sits at the high end of what is called the bridge market in the fashion trade. Bridge companies like Ellen Tracy sit between less-expensive “better and moderate” labels like Jones New York and the luxury designer labels, like Ralph Lauren and Calvin Klein.
“Herb Gallen has been a fixture in New York retailing since 1949,” Gilbert W. Harrison, chairman of Financo, the investment bankers that represented Ellen Tracy in the deal, reportedly said. Within the industry, the company is known for selling most of its clothes at full price—without resorting to discounts and promotions.
Ellen Tracy, which is a privately held company, was almost sold seven years ago to Bain Capital, but the deal collapsed.
Harrison said that one reason this deal worked was that Paul R. Charron, Liz Claiborne’s chief executive, had become friendly with Gallen over the last six months, “which enabled obstacles and hurdles to be overcome,” the newspaper reports.
Rumors of the negotiations between the companies had been in the wind for months “and it almost blew the deal,” Harrison reportedly said.
To preserve a secrecy that was already at risk, the companies signed the formal purchase agreement late Sunday night—and closed on it early Monday morning, the newspaper reports.
Liz Claiborne is in the midst of an acquisition binge. Within the last couple of years, the company bought Laundry, Lucky Brand Dungarees, Sigrid Olsen and Monet jewelry, among others, and signed licensing agreements with DKNY Jeans and Kenneth Cole Women’s Sportswear.