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Polo Ralph Lauren to Buy Canada's Club Monaco
Reuters
NEW YORK — Polo Ralph Lauren (RL.N), one of the world's best known fashion designers, said Monday it would buy Canadian apparel retailer Club Monaco Inc. (CMI.TO) for $52.5 million, more than doubling its retail base and expanding into a lower income bracket.

Under the deal, Polo Ralph Lauren, whose designer goods range from shirts to cologne to bath towels, agreed to pay C$13 ($19.75) a share to purchase all 6.5 million outstanding common shares of Club Monaco, which sells casual apparel in Canada, the United States and Asia, and assume its debt.

"This acquisition is a major growth opportunity for us to build a significant vertically integrated retailing format that complements our other retailing formats," said Ralph Lauren, chairman and chief executive officer of Polo Ralph Lauren.

Club Monaco, which operates or franchises about 125 outlets in Canada, the U.S., Japan, Korea and other Asian countries, will operate as a separate subsidiary of Polo Ralph Lauren.

"It gives Polo Ralph Lauren a taste of transnational retailing," said Kurt Barnard, publisher of Barnard's Retail Trend Report in Upper Montclair, New Jersey. "It's their way to try to take advantage of a market I think is good for them." He added that the Canadian retail market is not quite as upscale as the sector in which Polo Ralph Lauren operates in the United States.

Club Monaco's clothes are "younger, hip, edgy," said analyst Carol Pope Murray of J.P. Morgan Securities.

"It's a product design and brand design that captures a different consumer than Polo," she said.

She said Club Monaco will benefit from Polo's size and experience.

For Club Monaco, the deal, which is expected to close by this spring, gives it access to cash and a name that should help it grow.

"Today's announcement offers Club Monaco the opportunity to achieve stronger growth as part of one of the world's most highly respected companies," said Club Monaco's chairman, president and chief executive Joseph Mimran, who owns 20 percent of the company's stock, in a statement.

In the same statement, Lauren said his company should be able to accelerate the growth of Club Monaco, which said in mid-February that it was in talks with a third party regarding a possible business combination.

Polo Ralph Lauren operates about 30 Polo Ralph Lauren, Polo Jeans and Polo Sport stores and more than 70 outlet stores in the U.S. The stock was off 56 cents at $19.375 in morning activity on the New York Stock Exchange.

Club Monaco, traded on the Toronto Stock Exchange, was up C$1.60 ($2.43) at $12.60 ($19.15).

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