By and  on June 15, 2006

NEW YORK — Jones Apparel Group is in play, although that doesn't appear to be stopping the $5 billion apparel giant from courting new deals.

According to sources, Jones has been negotiating a deal with Vera Wang, possibly to produce a new line. Such a potential move is being viewed as a way for the group to enhance its value to prospective buyers and boost the bidding closer to Jones' asking price of $35 to $38 a share.

Sources said Jones appears to be holding talks with at least two leading bidders. Bain Capital is said to be "seriously" interested in acquiring the company and has been in discussions with its management since the outset, while Apollo Management is understood to be another remaining bidder. Texas Pacific Group, which could be partnering with one of the private equity firms, remains a latecomer to the bidding and is viewed as being primarily interested in Barneys New York, the asset that many bankers and industry executives consider the crown jewel in Jones Apparel Group's portfolio. Bain declined comment and Apollo couldn't be reached.

Three second-round bids were received around May 25 and the average bid was in the $32-a-share range, according to sources. This is below what the company and its bankers are said to have wanted.

Cerberus Capital Management is believed to have dropped out of the bidding in mid-May and didn't make a second-round bid, as reported.

Apparel executives at competing firms say they expect a deal for Jones will be concluded before the end of the summer. One believes the price could inch back up to the $34- to $35-a-share range.

Sources say Peter Boneparth, chairman and chief executive officer of Jones, is anxious to add a marquee name to his stable of better and moderate brands to raise the company's value. Jones does the bulk of its apparel business with labels such as Jones New York, Anne Klein New York, Nine West, Kasper and AK Anne Klein. A deal with Wang could result in the introduction of a new sportswear label. Although Wang hasn't been a factor in the sportswear category previously, her name is well recognized by consumers and Jones could turn the category into a major one for Wang.

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