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Jones Apparel, Istithmar Agree on New Barneys Deal

Reuters
Wednesday, 8 Aug 2007 | 9:00 PM ET

Jones Apparel Group said on Wednesday it agreed to sell its Barneys New York chain to Istithmar for a sweetened price of $942.3 million, after the Dubai-owned firm raised its offer
in the face of a rival bid from Japan's Fast Retailing.

The amended agreement comes after Fast Retailing had raised its offer on Sunday to $950 million in an escalating bidding war for the luxury department store chain.

The new agreement also adds extra protection for Istithmar in the form of a larger termination fee. Jones Apparel must pay Istithmar $34.7 million to cancel their deal, up from a previous break-up fee of $22.7 million.

Fast Retailing, owner of the Uniqlo chain, has until Thursday at 5 p.m. U.S. East Coast time to make another offer. Even though Fast Retailing's existing bid is higher than Istithmar's new offer, the bigger termination fee now adds an extra cost to win the auction and scuttle the deal between Jones and Istithmar.

"In light of the revised offer from Istithmar, and the substantially enhanced deal protections granted to Istithmar by Jones, we are evaluating whether it would be in the best interests of Fast Retailing's shareholders to continue pursuing this transaction," a Fast Retailing spokesman said.

Jones Apparel had agreed to buy Barneys in 2004 for $400 million, moving a company that supplied clothes and shoes to mall department stores and discounters into the luxury retailing market.

Jones Apparel, which also owns clothing, shoes and accessories brands such as Nine West, Gloria Vanderbilt and Jones New York, had put itself up for sale twice in the past year but failed to find a buyer. It said earlier this month that the whole company was no longer for sale.

Jones Apparel originally agreed to sell Barneys to Istithmar in June for $825 million. David Jackson, chief executive of Istithmar, previously told Reuters that the company could consider launching Barneys in markets such as China and the Middle East if it completes the deal.

Istithmar's investments on behalf of the Dubai government include a stake in Standard Chartered. and luxury ocean liner Queen Elizabeth 2.

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