Levi Strauss Folds Plan to Sell Dockers Brand

Unable to get the price it wanted, Levi Strauss & Co. has pulled its Dockers brand off the auction block, the jeans maker said Monday.

Dockers had been up for grabs since May, when San Francisco-based Levi said it would explore selling the casual-clothing division to reduce its debt of about $2 billion and rivet attention on its denim brands.

But no bidder was willing to ante up what Levi believed the brand would be worth going forward, and the company decided to keep it, Chief Executive Phil Marineau said in an interview.

“We weren’t desperate to sell the business,” he said. “It was one way to cut our debt down.”

Investment bankers said the Dockers auction failed to generate much interest and that only two bidders submitted formal offers. Private equity firm Vestar Capital Partners was involved in talks for the brand but wanted to cut the price to about $650 million, instead of the $800 million or more that Levi had sought, according to one investment banker.

Said another investment banker who asked not to be identified: “I suspect that Levi will let some time pass and then quietly re-market the deal.”

Marineau, however, said the brand wouldn’t go back on the block. He declined to comment on Levi’s asking price for Dockers or to reveal who was involved in the bidding, except to say that there were “multiple” interested parties.

Early on, bankers had figured Dockers could fetch $1 billion to $1.4 billion because of strong licensing deals and good cash flow.

Levi, which has been immersed in an effort to turn around its business, said last week that it had recorded a third-quarter profit despite a drop in sales.

Last year, Dockers sales accounted for about 24% of Levi’s overall annual sales of $4.1 billion. Including licensed products, the Dockers brand’s total wholesale sales worldwide were about $1.4 billion last year, Marineau said. But sales of both Dockers and Levi apparel have fallen in recent years.

Privately held Levi discloses financial results because its bonds are publicly traded. On Monday, Levi bonds with a 12.25% coupon and maturing in 2012 fell to 103.5 cents per $1 of face value from 109.75 cents on Friday, according to Bloomberg News data.

Reuters was used in compiling this report.