WWD.com/beauty-industry-news/financial/fast-retailing-istithmar-raise-offers-on-barneys-487838/
government-trade
government-trade

Fast Retailing, Istithmar Raise Offers on Barneys

The bidding war for Barneys New York was ratcheted up a notch with offers from Fast Retailing reaching $950 million in cash.

NEW YORK — The bidding war for Barneys New York was ratcheted up a notch with Jones Apparel Group’s announcement Sunday that it had received amended offers from Fast Retailing, raising its unsolicited offer to $950 million in cash, and affiliates of Istithmar, increasing its bid to $900 million in cash.

Jones said it held a number of discussions on Friday with advisers to both parties.

Istithmar, a Dubai-based private equity firm, has until Wednesday to respond to Fast Retailing’s latest offer.

Fast Retailing could not be reached for comment Sunday. A spokeswoman for Peter J. Solomon Co., financial adviser to Istithmar, declined comment.

Jones on June 22 entered into a definitive agreement to sell Barneys to an affiliate of Istithmar for $825 million in cash, subject to purchase adjustments. The agreement with Istithmar includes a “fiduciary out” clause that allows other parties to bid on either Barneys or all of Jones Apparel Group. Under the agreement, Jones was able to consider unsolicited proposals from third parties as long as they were received prior to July 22. All due diligence and negotiations with a third party would have to be completed by Aug. 11. Should Jones end its agreement with Istithmar, it would be required to pay the Istithmar affiliate a termination fee of $22.7 million.

Neither the Istithmar deal nor the Fast Retailing proposal includes the Japanese license for Barneys Japan, which is owned by Sumitomo Corp. and Tokyo Marine Capital.

Tokyo-based Fast Retailing, which owns the fast-fashion chain Uniqlo and is an investor in contemporary brand Theory, surprised the industry on July 5 by entering an unsolicited $900 million cash offer for Barneys, trumping Istithmar’s bid, which seemed relatively assured.

Fast Retailing said it approached Jones with its interest in Barneys in the fall. Fast Retailing currently operates 1,800 specialty stores in more than 12 countries, but not much is known about its plans for Barneys New York. Among the best known global brands within the Fast Retailing Group are Uniqlo, Theory, Comptoir des Cotonniers and Princesse Tam Tam. Uniqlo is Japan’s largest apparel retail chain with approximately 750 stores throughout Japan, as well as stores in the U.S., the United Kingdom, South Korea and China, including Hong Kong.

Both Istithmar and Fast Retailing are said to be eager to explore Barneys’ expansion possibilities overseas. Istithmar has experience in the luxury sector with investments such as the Mandarin Oriental Hotel in New York and the QE2. Istithmar also owns a stake in U.S. discount retailer Loehmann’s Holding Inc. The retail scene in Dubai continues to grow and the appetite for luxury products remains unabated. Barneys is said to have a following in the Middle East.

No matter who finally acquires Barneys, Jones stands to make a healthy return on its investment. The apparel and footwear group acquired Barneys in 2004 for $397.5 million. Same-store sales at Barneys were up 10.1 percent in the first quarter. The chain is believed to be on track to hit its goal of $1 billion in sales by opening more flagships and smaller Co-op contemporary units.