Clothing maker Tommy Hilfiger on Friday agreed to sell itself for $1.6 billion to private equity firm Apax Partners, a British buyout group. The move is an attempt to revive its ailing fashion brand that has suffered a sharp decline in US sales. Apax agreed to pay $16.80 per Hilfiger share in cash, representing a 5 per cent premium over Thursday's closing price of $16. Tommy Hilfiger, founder, will continue as principal designer after completion of the deal which is slated for the spring. David Dyer, chief executive, will step down and be replaced by Fred Gehring, head of Hilfiger Europe.

Apax has a track record of working with retail groups. It bought the Calvin Klein brand with Phillips-Van Heusen in 2002 and also owns casual clothing designer Tommy Bahama. Michael Phillips, a partner at Apax, said: "The flexibility that will be afforded Tommy Hilfiger Corporation as a private company with a powerful global brand will enable the business to grow." In a letter to employees, Dyer said: "This transaction is about getting bigger and better. I believe it will move our company to the next stage of its evolution as a global lifestyle brand." Hilfiger, which recently acquired the Karl Lagerfeld brand, designs and markets clothing worldwide. It also licenses accessories and home furnishings.

The youth-oriented brand was popular in the 1990s but has lost ground in the US to rivals. Consolidation of big US department stores such as Federated, owner of Macy's and Bloomingdale's, has also depressed demand. Hilfiger has been struggling to turn itself round since 2003. It has been expanding in Europe with new stores in Vienna, Zurich and Croatia. But the company has been flagging in the US. Last month it forecast a 35 per cent drop in US wholesale revenue for fiscal 2006 from about $680 million in 2005. In spite of growth in international sales, Hilfiger expected total revenue for fiscal 2006 to decrease between 5 and 9 per cent.

In October it announced 135 job cuts in the US out of a global workforce of 6,000 to help offset weak results. Hilfiger put itself up for auction in the summer. Other bidders reportedly included a partnership of Li & Fung, the Hong Kong clothing manufacturer, and US fashion group Iconix; and Sun Capital, another private equity firm.