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.

This story first appeared in the June 15, 2006 issue of WWD. Subscribe Today.

However, the fact that Jones could be sold to another company may pose a stumbling block for Wang.

The designer, who is known for drawn-out negotiations, has been in talks with several suitors at various levels of the market. For two years, Wang has been negotiating with Haim Dabah, chairman and ceo of Regatta Pacific Alliance, about a mega apparel licensing deal between Wang and Kohl’s Department Stores. A Kohl’s deal via Dabah would enable the designer to develop a complete lower-priced lifestyle collection — using a derivative of her name — for the moderate department store chain and would be highly lucrative for Wang. Sources indicated she could earn as much as $100 million over a multiyear period by signing with Kohl’s.

Wang has seen her star rise in recent seasons as she has successfully segued from being strictly a bridal designer to doing ready-to-wear. Her business, whose apparel and licensed products generate $300 million in retail sales, has been on the upswing as her profile, editorial credits and press have risen substantially. She has amassed a growing network of licensees and a huge following in the bridal business.

Wang’s company has been aggressively working to extend its foothold beyond the bridal market by offering a mix of products catering to a woman’s complete lifestyle. While most of her licenses have been bridal related, the firm has negotiated for other categories and international deals. Currently, her label is available on products such as rtw, sunglasses, fine jewelry, fragrance, stationery, china and crystal. The company successfully launched a lower-priced dress line in 150 doors in spring 2005.

This past spring, Wang opened her first lifestyle boutique in collaboration with the Halekulani resort in Hawaii, showcasing her broad array of products. And this month, Wang will open a 1,700-square-foot boutique on Kolonaki Street in Athens, another cooperative deal. The store is part of her global push. In the past year and a half, Wang opened bridal salons in locations such as Brown Thomas in Dublin; the Shangri-La Hotel in Shanghai and Singapore; the Ritz-Carlton hotel in Jakarta, Indonesia, and the Shilla Hotel in Seoul.

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