Takeover Hilfiger by Jones Apparel?

Jones Apparel Group, in the midst of a licensing battle with Polo Ralph Lauren, has held preliminary discussions to acquire Polo rival Tommy Hilfiger. No deal is imminent, and only informal discussions have taken place between the chief executives of the two companies The Wall Street Journal reported. Up till now both companies have declined to comment. Both sides have good reasons to keep up the dialogue. In the past few years, luxury-goods companies and large apparel makers looking for prestige brands have snapped up major American fashion houses such as Donna Karan. Earlier this year, shirt maker Phillips-Van Heusen acquired Calvin Klein, leaving Tommy Hilfiger as one of the last publicly traded fashion companies dependent on a single brand.

Tommy Hilfiger has been seen particularly vulnerable to a takeover because it has USD 400 million in cash, a market capitalization of USD 539 million and has been pounded by weak sales and declining market share in its core menswear business. Jones Apparel, owner of Nine West, Jones New York and Norton McNaughton, has built itself into America's second-largest publicly traded apparel company, with 2002 sales of USD 4.34 billion, after VF Corp.