The world's biggest apparel company, VF Corp, on Monday agreed a deal to buy leading clothing manufacturer Nautica Enterprises Inc for $586 million.

The North Carolina-based company, behind brands such as Wrangler, Lee and The North Face, said the acquisition will enhance its portfolio and business mix by adding new brands, boost its presence in department and specialty stores and provide it with a strong new entry into the sportswear category.

It will pay $17 per share in cash for New York-based Nautica, along with $14.6m to cash out its workers' stock options.

Nautica vice chairman, David Chu, will receive $38m for his rights to 50 per cent of the royalties that come from licensing Nautica's trademark, as well as another $33m on both the third and fourth anniversaries of that date.

VF chairman and CEO, Mackey McDonald, said: "Today marks an exciting milestone for both VF and Nautica. VF will gain a powerful lifestyle brand that extends across multiple product categories, including men's sportswear and jeanswear, in addition to a broad array of licensed categories including men's tailored clothing, dress shirts, accessories, women's swimwear, fragrances, eyewear, watches and home furnishings.

"It also provides additional diversification to our business mix by strengthening our presence in department stores. At the same time, Nautica will benefit from VF's superior supply chain, inventory and brand management capabilities."

Nautica chairman, president and CEO, Harvey Sanders, added: "We are thrilled to be joining forces with VF, a company that is a great fit for us as we share similar values, integrity and culture."

Nautica will continue to maintain its headquarters in New York City and its distribution centre in Martinsville, Virginia.

Mr McDonald said his priorities include: stabilising and reinvigorating the Nautica men's sportswear business; strengthening the Nautica men's and women's jeans and Earl Jean businesses; and exploring the development of a new women's sportswear line for future launch.

Mr McDonald said his company will be working with John Varvatos to determine the best plan for the future growth of the John Varvatos branded business.

VF will finance the acquisition initially through available cash and short-term borrowings.