Private equity giant KKR & Co. has dropped out of the hunt for The Jones Group Inc.
The investor had teamed up with Sycamore Partners in a bid to buy the company. A source familiar with the situation said Thursday that Sycamore was still in pursuit, with managing director Stefan Kaluzny now taking the lead. Although KKR is on the sidelines, the firm might still have a role to play down the line, the source said.
The departure could change the dynamic in the process to sell Jones, which has a portfolio of roughly 35 brands, in both footwear and apparel. Investment bank Citi has been running the auction to sell Jones, either in whole or in parts, since July, and the last of the second round bids came in on Monday.
The process is now centered on determining “what people really want and what they will pay” and “figuring out the pathway to a transaction,” said one source.
Jones has a current market capitalization of $1.14 billion and, adding in debt, an enterprise value of $2.06 billion.
Although a sale of the entire company would be simpler, Jones might ultimately get a better price if it sells the business off in parts. And that dynamic appears to have played a part in KKR’s departure.
KKR and Sycamore submitted a joint bid for the entire company and were told to sweeten the offer since a sum-of-the-parts analysis garnered a higher price. Executives at Sycamore declined comment and a KKR spokeswoman could not immediately be reached late Thursday.
There are risks to holding out for a higher price.
One M&A expert monitoring the process noted that selling the company as a whole, when one can, is often the easier solution. Weighing bids for different parts of a company can get complicated and result in a drawn-out process that takes longer. Bidders can start to lose interest or lower their valuations if sales start to slip.
Leonard Green & Partners, Golden Gate Capital, Iconix Brand Group Inc. and G-III Apparel Group Ltd. are all said to have looked over Jones during the process, although it’s not clear who submitted bids. A number of other players interested in individual brands or just part of the company are also on the sidelines ready to swoop in and make an opportunistic buy.
The sale process has helped juice Jones’ stock, which closed down 3.7 percent to $15.64 Thursday, but is still up 43 percent for the year. The stock traded below $15 from early 2011 until May — around the time when activist investor James Mitarotonda, head of Barington Capital Group, joined the company’s board.
Mitarotonda pressured to company to tighten up operations, something Jones was already working on.
The high end of Jones’ portfolio, including Stuart Weitzman and Kurt Geiger, is seen as the most desirable. Those brands also have a profile similar to the accessories-heavy model that has pushed Michael Kors, Tory Burch and Kate Spade to prominence.
The Jones New York family of brands, on the other hand, has been uneven and is also largely dependent on the traditional department store channel.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast