NEW YORK — Government housing data that suggests a cooling market took the steam out of earlier broader stock gains last week, but merger and acquisition speculation bolstered components within the WWD Composite Stock Index.

New, single-family home sales declined for a second month, which worried investors who pulled back trading across several sectors. As a result, the S&P 500 dropped 0.3 percent to 1,302.95 on Friday from 1,307.25 the prior week, while the WWD Composite Stock Index rose 0.7 percent to 1,140.30 from 1,132.64.

The Commerce Department said single-family home sales fell 10.5 percent last month, which followed a 5.3 percent decline in January. More depressing to investors were median prices for new homes, which fell 1.6 percent last month, the fourth consecutive month of declines.

Regarding the WWD Composite Stock Index, the surge in valuation of Jones Apparel Group by 14.7 percent to $35.50 pushed the index up. Jones Apparel was one of the leading gainers for the week.

Early in the week, the company said it was putting itself up for sale. It was a surprise move by the $5 billion apparel maker. The company is not considered distressed, although there’s been softening sales in the moderate segment.

There’s been no bidding on the company, but financial sources say private equity firms Texas Pacific Group and Cerberus Capital Management are in discussions with Jones. Sources said the talks could lead to either firm making an offer for Jones or to a joint bid.

Financial sources said Jones is looking for at least $40 a share, which would value the group at $4.56 billion, and that a deal could be concluded within six weeks.

An acquisition by TPG, which owns J. Crew as well as Neiman Marcus, might result in the creation of a megaluxury and specialty retailer, one that would redefine the high-end channel. Jones said it was looking to sell the entire company, but analysts said last week that financial buyer would likely split up the company, which has business units in footwear and apparel as well as retail with its Barneys New York operation.

This story first appeared in the March 27, 2006 issue of WWD. Subscribe Today.

The current M&A market is red hot, and financial sources say there’s lots of money on the sidelines for deal-making — especially from the private equity firms.

According to M&A trend tracker FactSet MergerStat LLC, there were $114 billion worth of announced global apparel and apparel-related deals last year, and roughly $83 billion in the global retail sector. Total global volume in the M&A market was about 38 percent higher last year than in the prior year. About 40 percent of the deals involved private equity money.

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