Fool.com: Warnaco Nets Authentic Fitness (Breakfast News) November 16, 1999

BREAKFAST WITH THE FOOL

Tuesday, November 16, 1999

"You only live once, but if you work it right, once is enough."
-- Joe E. Lewis, American comedian

Warnaco Nets Authentic Fitness

By Richard McCaffery (TMF Gibson)

Lingerie, underwear, and clothing manufacturer Warnaco Group (NYSE: WAC) has agreed to repurchase Authentic Fitness (NYSE: ASM) for $20.80 per share in cash along with the assumption of debt, or about $540 million.

The deal values Authentic Fitness, maker of Speedo swimwear and accessories, at a 6% premium over its closing price of $19 5/8 last night, and is subject to a majority of Authentic Fitness shares being tendered and not withdrawn. The company has about 23 million shares outstanding. Both boards have approved the sale.

The deal is a bit of an improvement over last month's offer of $20.50 per share. Authentic Fitness hired Chase Securities Inc. to act as financial adviser on the deal after Warnaco tendered its offer.

If you take your swimming seriously, Speedo is the way to go. With over 60% market share in the competitive swimwear market, it's kind of the AT&T of swimsuits. Along with swimwear, Authentic Fitness manufactures and markets accessories and active fitness apparel under many names including Catalina, Anne Cole, Cole of California, Ralph Lauren, and Oscar de la Renta.

In addition, it operates 139 Speedo Authentic Fitness retail stores in the United States and Canada. Revenues grew to $411 million in fiscal 1999 from $86 million in 1991, a compound annual growth rate of 21.7%.

Warnaco, which sold Authentic Fitness in 1990 for $85 million, has a wide range of its own and licensed brands, including Calvin Klein and Chaps by Ralph Lauren.

News to Go

Intermediate chemical, polymer, and methanol manufacturer Lyondell Chemical (NYSE: LYO) has reached agreement to sell its polyols business and a stake in its U.S. propylene oxide operations to German chemical company Bayer AG for about $2.45 billion.

Popular Web portal Lycos (Nasdaq: LCOS) reported fiscal first quarter pro-forma net income of $714,000, or $0.01 per share, in line with analyst expectations and up from breakeven last year, according to IBES International estimates. Sales jumped to $56 million, up 126% from $24.8 million a year ago, as advertising revenue, e-commerce, and licensing boosted growth.

Internet and intranet e-commerce software company Ariba (Nasdaq: ARBA) plans to acquire privately held TradingDynamics for $400 million in stock in a deal expected to close this March. TradingDynamics makes software for business-to-business Internet trading applications.

Network processor manufacturer MMC Networks (Nasdaq: MMCN) expects to report disappointing fourth-quarter earnings because of lower sales to Cisco (Nasdaq: CSCO), its largest customer. The company said its relationship with Cisco remains strong, but that sales were slow as a result of a new product delay. MMC expects earnings between $11 million and $13 million.

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