DUBAI GROUP BUYS BARNEYS By SUZANNE KAPNER
June 23, 2007 — The Jones Apparel Group said yesterday that it had reached an agreement to sell Barneys New York to a Dubai investment fund for $825 million, more than double what it paid to buy the luxury department store chain almost three years ago.The announcement ends months of speculation over the future of Barneys, and brings Jones full circle to once again focus on its department store brands such as Jones New York and Anne Klein at a time when apparel manufacturers are getting squeezed.
Players such as Liz Claiborne and Kellwood have been laying off employees and reorganizing to better compete in a world where department stores have consolidated and pushed private label goods at the expense of national brands.
Jones Chief Executive Peter Boneparth said yesterday that the company was well-positioned compared with rivals. He added that Barneys now requires higher levels of investment to continue growing and commands smaller operating margins than do Jones’ mid-tier brands.
Istithmar, the investment group that is controlled by the Dubai government, is well positioned to plow money into the Barneys name. Like other Gulf state companies, Istithmar is flush with oil cash and has been on a buying spree lately. It just snapped up the Queen Elizabeth 2, the famed cruise ship.
Istithmar is said to be interested in expanding the brand in the Middle East.
Of course, there is always the possibility that another suitor could emerge at the last minute for Barneys, or for all of Jones, a possibility Jones alluded to yesterday when it said it was “permitted to entertain proposals from third parties.”
Jones put it self on the block last year, but did not go through with a sale after bids came in below expectations.
Rival bidders would have to make an offer by July 22 and complete due diligence and negotiations by Aug. 11, the company said. Jones would also be liable for a breakup fee of as much as $22.7 million.
Jones said it was considering several uses for the proceeds, roughly $770 million after taxes and expenses, including buying back stock, paying down debt and continuing to invest in the company’s current stable of brands.
Jones shares rose 42 cents, or 1.5 percent, to close at $28.78 in New