Jones Apparel Group Inc. received a $900 million unsolicited non-binding proposal for its Barneys New York Inc. division from Japanese clothing company Fast Retailing Co.
In June, the Bristol, Pa., apparel wholesaler agreed to sell luxury retailer Barneys for $825 million in cash to Istithmar, the Dubai government's investment arm. Jones Apparel said that agreement is still in effect.
Jones' board made the requisite determination under its agreement with affiliates of Istithmar that will allow Jones to enter into discussions with Fast Retailing about the proposal.
If Jones were to end its agreement with Istithmar, it would be required to pay a termination fee of $20.6 million, or $22.7 million if Jones terminates the offer after July 22.
Fast Retailing owns Uniqlo casual clothing as well as women's wear producer Cabin Co. and French underwear maker Petit Vehicule SA. In September, Fast Retailing said it was targeting the U.S. retail market for acquisitions. The company recently expanded Uniqlo to the U.S.
Jones Apparel has struggled as its department-store clients have consolidated and begun to produce their own private-label fashions. It paid about $400 million for Barneys in 2004. Barneys operates about 35 stores, including full-size flagship shops in New York; Beverly Hills, Calif.; Boston; and Chicago; smaller Barneys New York Co-Op locations; and outlet stores.
Selling Barneys is a big step for Jones Apparel. President and Chief Executive Peter Boneparth unsuccessfully tried to sell the entire company to a private-equity firm last year. Earlier this year, he and the company both said they won't extend his contract when it expires in two years.
The sale of Barneys will leave Jones even more exposed to problems plaguing suppliers of traditional department stores. Competition for Jones brands such as Gloria Vanderbilt, Anne Klein and Nine West, which dominated sales floors in the 1990s, has increased. Meanwhile, Barneys has been Jones' top-performing asset amid a boom in sales of luxury goods.
Jones' deal with Istithmar underscores the increasing investment appetite of the Gulf countries, which are investing their oil riches in diverse assets across the West. Istithmar also has interests in the New York-based clothing retailer Loehmann's Holdings Inc., investment bank Perella Weinberg Partners, and various commercial buildings across New York and London.
In recent premarket trading, Jones Apparel shares were at $30; shares closed Tuesday's session at $28.40.
source:online.wsj.com
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