Lee Jeans Maker Buying Maker Of Wrangler’s
WYOMISSING, Pa. (AP) _ VF Corp., producer of Lee jeans, says it will buy the parent of rival Wrangler jeans in a deal valued at about $791 million, which would make VF the nation’s denim king ahead of Levi Strauss & Co.
The deal would give VF, headquartered in this southeastern Pennsylvania community, 25 percent of the market, compared with 22 percent for Levi’s, R.E. Gregory Jr., VF’s president and principal operating officer, said Sunday.
Wrangler is a part of Blue Bell Holding Co., of Greensboro, N.C., whose board agreed Saturday to sell the entire company. Along with Wrangler, VF would acquire Blue Bell’s other products - Jantzen swimwear and sportswear, Red Kap work clothes and Jansport sports clothes.
The sale is subject to approval by Blue Bell’s shareholders, who are the company’s private owners, and by the Department of Justice, which is likely to examine the deal for antitrust implications.
Gregory said he expected no problems and predicted that the sale would be complete by the end of September.
VF had sales last year of $1.48 billion, while Blue Bell had sales of $1.1 billion, Gregory said.
Both companies first disclosed they were considering a merger last week, and industry analysts said it was a smart move. Sales of Lee jeans have been VF’s mainstay. The addition of Wrangler jeans, which will keep its label, is expected to help the company make strong inroads into a slow-moving market.
Gregory foresees little competition between Lee, Levi’s and Wrangler, because, he said, they appeal to different customers.
″In somewhat of an oversimplification, Levi’s is concentrated with urban consumers, Lee is concentrated with more of a suburban consumer and Blue Bell is principally concentrated with rural consumers,″ he said.
Under the terms of the agreement, VF would pay Blue Bell’s shareholders $122.5 million in cash and about 5.3 million shares of VF stock. At Friday’s closing price of $34.75, the stock was worth more than $184 million.
VF is also buying about $71 million of preferred stock owned by Blue Bell’s employee stock ownership plan and it is assuming $414 million of Blue Bell’s debts.
Lee accounted for three-fourths of VF’s profit of $139 million last year. VF also makes Vanity Fair lingerie, Bassett-Walker sweatsuits and jogging togs, cotton underwear and men’s slacks.