NEW YORK — Speculation continues to swirl even as the Barneys New York deal comes down to the wire.
As WWD reported June 4, Istithmar, the investment arm of Dubai, is the front-runner to buy the luxury store chain from Jones Apparel Group. While there is a wide range of prices being thrown about, sources close to the company said the chain will be sold for an estimated $800 million to $850 million.
That number could come as a surprise to some earlier suitors. WWD reported that Neiman Marcus and Nordstrom both were potentially interested in Barneys and considered offers close to that amount. But they both dropped out after the bidding appeared to escalate.
Jones bought the Barneys chain in 2004 for about $400 million, and based on the keen interest from buyers, it has proven to be a key asset for the company. Last year, Jones unsuccessfully tried to sell the entire company.
A disposal of Barneys would leave Jones with the quandary of what to do with its remaining operations, particularly the struggling moderate apparel brands that chief executive officer Peter Boneparth has indicated he would consider selling. And sources said those efforts could be gaining steam — with one suitor possibly being Apax Partners. The private equity group is no stranger to the fashion business, currently holding a major stake in Tommy Hilfiger and at one time having an ownership position in Calvin Klein.
The acquisition of Barneys would be a crown jewel for Istithmar, which has been steadily scooping up prime properties in New York, including the Mandarin Oriental Hotel and W New York-Union Square. It also has a significant investment in Kerzner Group, the developer and operator of Atlantis Resorts. Istithmar also has interests in Loehmann’s Holdings Inc. and investment bank Perella Weinberg Partners LP.
Barneys currently operates seven freestanding stores, with an eighth to open in San Francisco in September; 14 Co-ops, and one set to open in Hackensack, N.J., and 13 outlets. While Barneys has successfully been rolling out its Co-op format in the U.S., observers view the potential for even smaller shops in Middle Eastern hotels and tourist locales, given the multitude of high-end luxury resort complexes popping up throughout the region.
Istithmar, a private equity and investment house, is based in Dubai, with offices in Shanghai and New York. Established in 2003, it is 100 percent owned by Dubai World which in turn is wholly owned by the Government of Dubai. Over the last several years, it has invested in over 30 companies in three sectors — consumer, industrial and financial services — deploying in excess of $1.6 billion in capital.