DALLAS, Jan 9, 2004/ FW/ --- The fashion world just became smaller again! In a press conference yesterday, Kellwood and Phat Fashions announced that Kellwood would acquire Baby Phat, Phat Farm and Phat.

The urban lifestyle market is worth $10 billion annually and Phat Farm and Baby Phat are highly sought after brands.

“We believe they represent the crown jewels of the urban business," said Hal J. Upbin, Kellwood chairman and chief executive officer in a statement.

Currently, Kellwood owns include Sag Harbor, Koret, Jax, David Dart, Democracy, David Meister, Dorby, My Michelle, Briggs New York, Northern Isles, David Brooks, Kelty, and Sierra Designs.

The company, thorough licensing agreements produces Run Athletics, Def Jam University, Liz Claiborne, Calvin Klein, XOXO, IZOD, Dockers, Gerbe, Slates and Bill Burns are produced under licensing agreements.

With the acquisition of Phat Fashions, Kellwood expanded its market to include the hip-hop generation. It also opened the door for getting into the high-end fashion business.

Kellwood had been trying to expand to high fashion since last year with its bid for Kasper LLC, which owns the Anne Klein brand. But they Jones New York won the bidding.

Flushed with cash, they looked elsewhere, and Phat Fashions is a perfect fit. Kellwood's partnership with Russell Simmons began in 2003 through two licensing agreements. The first one was in April for Run Athletics men's activewear collection, and the second in August for Def Jam University sportswear for young men and juniors.

"For two years, Russell and I have enjoyed numerous conversations, getting to know each other's business and markets, and exploring the viability of a Kellwood/Phat Fashions union. Our Kellwood team is energized to see this business venture come to fruition. This is a tremendous opportunity for Kellwood and Russell - and ultimately consumers and our retail partners," commented Robert C. Skinner, Jr., Kellwood president in a statement.

According to the agreement, Phat Fashions will operate as a subsidiary of Kellwood. Simmons will remain at the helm of Phat Fashions as CEO. Kimora Lee Simmons will continue as the principal creative arbiter for Baby Phat.

Phat Farm, which was launched in 1992 is primarily urban menswear, while Baby Phat was launched in 1999 is mainly urban womenswear. Both brands have enjoyed phenomenal growth as urban lifestyle and hip-hop became part of the mainstream.

“We are now at the point where we need the very best resources and infrastructure to build our underground phenomenon into a mainstream staple. Kellwood provides us with these opportunities,” quoted Russell Simmons about the merger.

Primary licensing categories for Phat Fashions include apparel for men, women, and children; athletic shoes, and accessories.

Beginning with the Fall 2004 season, Kellwood will produce the men's Phat Farm collection through its own menswear organization.

The Company also plans to introduce new product categories that fit within its already existing capabilities and expertise such as intimate apparel for Baby Phat.

The transaction is expected to close in early February.

(Photo above: Kimora Lee Simmons holding the Baby Phat Visa Credit Card, which was launched last September during New York's Spring 2004 season. Photo courtesy of Baby Phat)