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Fast Retailing Formalizes Barneys Offer

Fast Retailing Co. Ltd. made a formal offer Tuesday to acquire Barneys New York from Jones Apparel Group for $900 million in cash.

NEW YORK — Fast Retailing Co. Ltd. made a formal offer Tuesday to acquire Barneys New York from Jones Apparel Group for $900 million in cash.

Japan-based Fast Retailing said its offer is conditional on the execution of a mutually acceptable purchase agreement, which is not subject to financing and can be consummated on an expedited basis.

The Japanese firm, known for its Uniqlo brand of casual apparel, said in a statement that it has high regard for the Barneys brand, and the specialty retailer’s management and creative teams. Fast Retailing also said it is “committed” to supporting the continued growth of Barneys as a leading luxury department store brand.

Jones, which said in a statement Tuesday that it was currently in discussions with Fast Retailing, disclosed on July 5 that it had received an unsolicited, nonbinding bid for Barneys from Fast Retailing of $900 million in cash, which was subject to due diligence and other conditions.

On June 22, Jones entered into a definitive agreement to sell Barneys to an affiliate of Istithmar, a Dubai-based private equity and alternative investment house, for $825 million in cash, subject to certain purchase price adjustments. That agreement remains in full force and effect.

Executives at Istithmar could not be reached for comment Tuesday. The investment house said in a July statement at the time Fast Retailing revealed its proposed bid: “We believe that our definitive agreement to acquire Barneys New York for $825 million reflects a full and fair valuation for the company. We remain committed to closing this transaction and continue to be enthusiastic about working in partnership with the strong management team of Barneys to grow this unique asset further and create an even brighter future for the company.”

Jones and Fast Retailing now have until Aug. 11 to negotiate a binding agreement. If one does not materialize, the agreement Jones has with Istithmar proceeds to closing. If an agreement between Jones and Fast Retailing is successfully reached, then Istithmar has to consider what it wants to do, such as possibly match the terms of the Fast Retailing offer, a source said.

Should Jones end its agreement with Istithmar, it would be required to pay the Istithmar affiliate a termination fee of $22.7 million.

This story first appeared in the August 1, 2007 issue of WWD.  Subscribe Today.