Jones, Barneys Deal Done at $397M

Jones Apparel Group Inc. said on Monday that it completed its acquisition of luxury retailer Barneys New York in a transaction valued at $397.3 million.

NEW YORK — Jones Apparel Group Inc. said on Monday that it completed its acquisition of luxury retailer Barneys New York in a transaction valued at $397.3 million.

Shareholders received $19 a share, for a total of $291.3 million to stockholders. As part of the transaction, Jones also said it funded the repurchase of Barneys’ outstanding senior secured notes due in 2008, with a face value of $106 million.

The deal was first announced on Nov. 11 to the surprise of Wall Street and the retail community, with Jones beating out competitors such as designer Elie Tahari, Nelson Peltz of Triarc Co. and Bear Stearns’ Merchant Banking Group.

The acquisition was a step outside the box for Jones, which is primarily known as a leading moderate and better apparel manufacturer, though it operates about 900 stores, many specializing in footwear as a result of its Nine West purchase in 1999.

“The acquisition of Barneys is a wonderful complement to our diversification strategy,’’ Peter Boneparth, chief executive officer of Jones, said in a statement. “Its focus on the luxury consumer provides an added dimension to our existing brand portfolio and creates future expansion opportunities.”

Boneparth added, “I welcome Howard Socol, chairman and chief executive officer of Barneys New York, and the entire Barneys team to the Jones family.”

Socol, who is leading the continued turnaround at the once-bankrupt retailer, signed a new contract at a base salary of $1.2 million a year. The pact expires in 2008.

Boneparth said during an interview last month that Barneys, which had $444.2 million in sales in 2003, can be built into a $1 billion business. He told Wall Street analysts that Barneys’ high-end business melds well with the distribution channel for Jones’ existing operations.

“Whether you like it or not, America is getting both poorer and richer at the same time, which is an unfortunate social commentary, but a real fact of life,” Boneparth said at the time. He explained that “catering to that growing number of wealthy, truly wealthy people, we perceive as a real opportunity for this company.”

While some analysts voiced skepticism about the deal, Boneparth emphasized, “The risk-reward on this was very, very attractive. This is not a bet-the-company event.”

This story first appeared in the December 21, 2004 issue of WWD.  Subscribe Today.

To assuage fears that Jones was getting into the unfamiliar territory of luxury accessories and designer apparel, Boneparth said that Barneys would be allowed to continue its course with the benefits of Jones’ financial muscle and logistical expertise. He said there’s one thing analysts definitely needn’t worry about: “We won’t Jones-ize Barneys.”