Istithmar Wins Bidding War for Barneys

Dubai-based Istithmar came out the winner in a month-long bidding war for Barneys New York. Jones Apparel Group, which owns the luxury retailer, made the announcement late Thursday after it failed to receive a counteroffer from Fast Retailing Co. LTD., a Japanese-based apparel retailer.

Istithmar, a private equity and alternative investment house owned by the government of Dubai, will pay $942.3 million in cash for Barneys, which has flagship stores in New York City, Beverly Hills, Chicago, Boston, and Dallas; two regional stores; and 14 co-op stores.

Istithmar’s latest bid was announced Thursday morning. Fast Retailing, the other bidder, had until 5 p.m. Thursday to make its counteroffer. The company, known worldwide for its Uniqlo brand of casual clothes, released a statement saying it withdrew its proposal.

This is actually the second time that Jones Apparel agreed to sell to Istithmar. On June 22, the company announced an agreement to sell Barneys to Istithmar for $825 million. However, under the terms of the agreement, Jones Apparel was permitted to entertain other unsolicited proposals for either Barneys or for Jones Apparel—whose main business is designing, marketing, and wholesaling branded apparel, including Jones New York, Evan-Picone, Norton McNaughton, and Gloria Vanderbilt. If Jones Apparel did pull out of the agreement, it would have to pay Istithmar a termination fee of $22.7 million.

On July 5, Jones Apparel announced it received an unsolicited bid of $900 million for Barneys from Fast Retailing. Fast Retailing updated its proposal July 25 to include a form of stock purchase agreement that was not subject to a due diligence condition. On Aug. 5, Fast Retailing increased its bid to $950 million.

Istithmar’s final bid Thursday was actually $7.7 million lower than Fast Retailing’s. However, it became the more attractive bid since Jones Apparel would not have to pay the termination fee.

“This investment will further our continued focus on the retail sector” said Istithmar’s chief executive officer, David Jackson. “We believe that we will be able to accelerate the growth of Barneys’ business by leveraging our experience in the sector and other investments worldwide.”

Howard Socol, Barney’s president and chief executive officer added: “This transaction further enhances our ability to develop our brand and grow our business. Working with Istithmar, we look forward to continued expansion of our flagship, CO-OP and outlet concepts to help us realize the considerable untapped potential of the Barneys brand.”