Jones buys Barneys

The shoes and clothing company Jones Apparel Group Inc. is buying upmarket department store Barneys New York Inc. for $106 million (GBP167.4 million) in cash. With this acquisition, Jones will enter the luxury retail arena.

Jones is to pay Barneys' stockholders $19 per share and will take on approximately $106 million in Barneys debt. The deal was announced last week Thursday, with full support from both companies' boards and 75% of stockholders supporting the transaction. Therefore, no further stockholder action needs to be taken. Barneys expressed interest in a strategic alliance, including a sale of the business, to promote growth of the company earlier this year. To this end it retained investment banks Morgan Stanley and Peter J. Solomon Co. as financial advisors. Barneys survived bankruptcy in 1999, with its two majority shareholders, Whippoorwill Associates Inc. and Bay Harbour Management LC, focusing on strengthening its position in the luxury retail market.

Barneys has flagship stores in Manhatten, Beverly Hills and Chicago, three regional full-price stores, four Co-Op Barney New York stores, focusing on young trendy fashion, and eleven outlet stores. With net sales of $442.2 million (GBP251.5 million), the company employs approximately 1,400 employees. In addition to the Jones brand, Jones Apparel recently acquired Gloria Vanderbilt and Kasper, which owns the Anne Klein label, and also owns the Nine West shoe brands. Jones Apparel generated $ 4.3 billion (GBP2.45 billion) in sales last year.

Following the closure of the deal - which should take place this December - the current Barneys team, spearheaded by chariman, president and CEO of Barneys, Howard Socol, will remain in place to lead the expansion of the business. Socol told reporters that he was excited by the possibilities for Barneys as part of the Jones Apparel Group. He added that the company is considering expansion beyond the spring of 2005 with Co-op store openings in Chicago, Costa Mesa, Calif., and Atlanta.