Warnaco Bids to Reacquire Firm

Authentic Fitness, a Commerce-based sportswear company whose swimwear brands include Speedo, Catalina and Anne Cole, would be reacquired by Warnaco Group Inc. under a proposed stock swap valued at $502 million.

The bid, if approved by Authentic Fitness’ board, would be part of a growth plan that would provide the funds for Authentic Fitness to expand its Speedo stores from 100 to as many as 500 in the next four years, said Linda Wachner, chairwoman of both companies.

“Together these two companies provide huge growth opportunities with very good strategic symmetries,” Wachner said.

New York-based Warnaco, a manufacturer of the Olga, Calvin Klein and Valentino Intimo brands of lingerie, proposed exchanging each share of Authentic Fitness for 0.725 share of Warnaco common stock.

Announcement of the proposed merger sent Authentic Fitness shares up $3.375 to $21.50 on Thursday on the New York Stock Exchange, while Warnaco lost $1.75 to $29.50.

Both companies are standout performers in the volatile apparel industry, and Wachner, 50, has been largely credited for their growth.

A 30-year apparel industry veteran who began as an assistant buyer and went on to hold top executive jobs, Wachner assumed the helm of Warnaco in a 1986 hostile takeover bid. In 1990, after an unsuccessful bid to sell Authentic Fitness to raise capital, she found another group of investors and acquired the smaller sportswear company for $85 million.

Under Wachner, Authentic Fitness has grown from sales of $85.5 million in fiscal 1991 to $266.1 million in the fiscal year ended July 1, 1995.

The company went public in 1992 at $7 a share. Through aggressive marketing, acquisition of smaller, less prosperous companies and the dumping of unprofitable lines, Wachner has guided Authentic Fitness to second place in the swimwear business, behind market leader Jantzen Inc.

Laurence C. Leeds Jr., managing director of New York investment firm Buckingham Research Group, previously said Wachner’s company could surpass Jantzen over time if Wachner continues to propel the company forward.

But last month, the sportswear company reported a quarterly loss of $750,000 after the bankruptcy filing of Herman’s Sporting Goods, one of Authentic’s biggest customers.

But Leeds said the problem with Herman’s is temporary and not part of the reason for the merger.

“For years, Linda wanted to put those companies together,” Leeds said. “She’ll get a much stronger Warnaco with a great synergistic match.”

Apparel industry insiders predict annual sales this year of $360 million for Authentic and $1.1 billion for Warnaco.

Authentic Fitness has formed a special committee of its board to consider the proposal. The transaction would be tax-free and accounted for as a pooling of interests.

Times wire services contributed to this report.