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The clock is ticking as the July 22 deadline approaches for any other third-party bidders for Barneys New York, and maybe even for parent Jones Apparel Group.
So far, Japan’s Fast Retailing is the only unsolicited bidder for Barneys, with an $896 million nonbinding offer. The one offi cial deal on the table is an $825 million accepted bid from Dubai investment firm Istithmar. The Istithmar offer, announced in June, is expected to go through, barring an announcement that negotiations with Fast Retailing have resulted in a binding offer. Fast Retailing and Jones have until Aug. 11 to conclude negotiations.
There’s also an outside chance the entire Jones Apparel Group will be sold. To be sure, there is no “deadline” to sell Jones the company. However, if Barneys were to be included in a company-wide sale, any negotiations and due diligence also would have to be concluded by Aug. 11 to facilitate completion of the Istithmar deal.
Of course, Jones has tried that route before, but came up short last year when it had to take the company off the market. The company said publicly that it was looking for a buyer in March 2006. It was later learned that the board was hoping for bids around $36 a share. One bidder, Bain Capital, walked away from the table because the Jones Apparel board believed the private equity fi rm’s $28 per share offer was far lower than the true value of the company.
So far, industry and Wall Street experts don’t foresee a sale of the entire company. Morgan Stanley analyst Brian McGough wrote in a research note July 12, the day former chief executive Peter Boneparth resigned, that he believed a “takeout of the entire business is increasingly unlikely. In fact, Boneparth was perhaps the biggest internal proponent for breaking up and/or selling Jones….We think it is more likely than ever that [Jones] makes a go at trying to run this company long-term.”
Wesley R. Card is the new ceo of Jones, and the expectation, considering his fi nancial background, is that there will be company assets up for sale. Jones said earlier this year that it was eyeing options for some of its moderate brands. But can Jones fi nd buyers for its brands now that Liz Claiborne is cleaning out 16 of its name brands?
According to one investment banker, who requested anonymity: “The brands that each company, Jones and Liz Claiborne, has for sale have different customers, so the buyers of one are not going to be buyers of the other.”
Andrew Jassin, managing director at the Jassin O’Rourke Group, a New York consulting firm, observed, “Both Liz Claiborne and Jones have similar models, but very different trademarks in their stables. Liz has the more upscale brands, and therefore can get higher valuations for its brands. Both fi rms have brands that are sold in a variety of distribution channels, and the trademarks have value so they all probably could be sold off to any number of companies.”