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Last-minute offer from private investors challenges Authentic Brands’ bid for Barneys

By Angela Gonzalez-Rodriguez

24 Oct 2019

Business |UPDATE

New York – A last-minute offer led by fashion label Kith’s investor Sam Ben-Avraham would have reportedly challenged the bid presented by Authentic Brands Group (ABG) to acquire ailing Barneys New York business.

The upscale department store operator, which filed for bankruptcy in August, had been seeking proposals to best Authentic Brands’ 271 million dollars bid. A deadline for competing bids was set for Wednesday evening.

It was right then when sources close to the matter cited by Reuters indicated that Israeli businessman Sam Ben-Avraham has made a competing offer, challenging ABG’s one. It was not immediately clear that Barneys had deemed the offer a so-called qualified bid, meaning that it meets certain thresholds to be considered in a bankruptcy court auction set for Monday, the same sources said to Reuters.

News broke earlier this week that the Ben-Avraham would have been working towards securing support for his bid from the founders of Intermix and Theory plus, Ron Burkle and others. Women’s Wear Daily first reported on Ben-Avraham’s offer.

Barneys halts its own auction as last-minute offer challenges Authentic Brands’ bid

The luxury retailer was scheduled to receive bids on Tuesday from potential buyers to pull it out of bankruptcy, followed by an auction on October, 24. But an application to extend the bid filing deadline has now pushed the auction to October, 28 with the bankruptcy court conducting a hearing on October, 31 to consider whether a Barney's sale to the successful bidder should be approved.

Barneys has already found a stalking-horse bidder in Authentic Brands Group and B. Riley Financial.

According to documents filed with the U.S. Bankruptcy Court in the Southern District of New York, the retail chain had entered into an agreement to sell its assets to the brand’s management company and investment banking firm.

Authentic Brands Group (ABG), or ABG, submitted a 271.4 million dollars bid for Barneys' assets last week after the retailer's August bankruptcy filing. This offer, referred to as ‘stalking horse bid’ functions as a minimum offer for a company that other bidders must beat at auction.

ABG plans to "liquidate" Barneys' Madison Avenue flagship and its six other remaining stores — but might reopen three of them — if it wins the bid, the ‘New York Post’ reported. To date, Barneys has preferred not to comment. The multi-brand retailer has a licensing deal with Saks and said it would aim to launch “Barneys at Saks” stores while maintaining some Barneys sites.

From Authentic Brands to Steve Madden, the other suitors to become Barneys’ new owner

Shoe guru Steve Madden was also putting together an eleventh-hour bid to buy Barneys New York, as per sources quoted by ‘Page Six’ which shared Madden´s “obsession with Barneys´ brand”. It’s worth recalling that Steve Madden has made a string of acquisitions as of late, buying shoes brand Greats and women’s line BB Dakota. He also owns brands such as Betsey Johnson, Brian Atwood and Blondo. The company reported second-quarter revenues of 445 million dollars this year.

Barneys and Authentic Brands did not immediately respond to requests for comment.

Authentic Brand’s offer calls for establishing Barneys shops in existing Saks Fifth Avenue stores. A handful of its brick-and-mortar outposts would also remain open, depending on negotiations with landlords, Reuters reported.

Image: Barneys New York. Credits: Jim Henderson, Creative Commons.