London Fog, Pacific Trail Merge -- Seattle Outerwear Maker To Keep Brand Identity

Seattle's Pacific Trail Inc., a major designer and distributor of outdoor wear, will become a division of London Fog Corp., under an agreement announced today.

A letter of intent signed by London Fog to merge with PTI Holding Corp., the parent of Pacific Trail calls for the Seattle company to maintain its present management and brand identity. The merged company will be called London Fog.

No sales terms were disclosed.

Describing the merger as "a perfect business marriage between leading companies with extremely complementary strengths and highly compatible management teams, Arnold Cohen, London Fog chairman and chief executive officer, said it will create the most dynamic company in the outerwear apparel industry.

London Fog will continue to operate its network of more than 100 factory stores. Projected sales for the merged company in calendar 1994 are expected to be near $500 million, with Pacific's Trail's share up to $60 million, the company said.

Pacific Trail recently reported that spring 1994 sales are up more than 15 percent and to-date sales in its children's division are beating last year's volume by 40 percent.

Founded in 1945, Pacific Trail was acquired in 1993 by a group of its senior managers and an investment group, GKH Retailing Inc. Former chief executive Larry Mounger left the company last year to join Sun Sportswear. Ron Epperson now is president of Pacific Trail.

The investment group is led by Jay and Tom Pritzker, both of Chicago, chairman and president, respectively, of the Hyatt Corp.; Dan Lufkin, a founder of the New York investment firm Donaldson, Lufkin & Jenrette; and Mel Klein, Texas attorney and private investor.

The merger is the latest step in a series of changes initiated by Cohen.

London Fog, founded in the 1920s and based in Eldersburg, Md., has about $350 million in annual sales. It is controlled by investment funds manager Merrill Lynch Capital Partners Inc. The merged company will continue to be controlled by the Merrill Lynch partners.

The management teams of the two companies also will have a significant ownership position in the merged company.