Japan's Fast Retailing raised its bid for luxury retailer Barneys New York to $950 million on Sunday, topping the sweetened offer Dubai government-owned Istithmar announced earlier in the day.
Istithmar has two business days from Monday to match Fast Retailing's offer, Barneys' owner, Jones Apparel Group, said in a statement released in New York.
Istithmar Chief David Jackson declined to comment on what his next move would be. Istithmar had agreed to buy Barneys for $825 million before Fast Retailing entered the fray with a $900 million offer. Istithmar had matched that offer earlier Sunday.
"If this offer is not accepted, Istithmar is entitled to our break-up fee of $22.7 million," the Dubai-based agency said in a statement before Fast Retailing's counter-bid.
Under a June agreement with Istithmar, Jones Apparel's management can explore bids for the whole company until Aug. 11.
Jones 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, which owns clothing, shoes and accessories brands such as Nine West, Gloria Vanderbilt and Jones New York, put itself up for sale last year but failed to find a buyer. It agreed to sell Barneys in June after several months of negotiations.
"Jones has transmitted to affiliates of Istithmar a written notice ... expressing the company's intention to accept the amended Fast Retailing offer," Jones said.
"Jones will be entitled to terminate the Istithmar agreement unless during the two business day period commencing on Aug. 6, affiliates of Istithmar make an offer that the company's board of directors determines ... to be at least as favorable to Jones as the amended Fast Retailing offer," it said.
Barney's could be Fast Retailing's biggest purchase to date. Having built a chain of more than 700 stores in Japan, the Tokyo-based company plans to expand abroad, investing as much as 400 billion yen (US$3.4 billion) on acquisitions to almost double its annual sales to 1 trillion yen by 2010.
Istithmar could consider launching Barneys New York in markets such as China and the Middle East if it completes the deal, Istithmar Chief Executive David Jackson told Reuters last month.
Istithmar's investments on behalf of the Dubai government include a stake in Standard Chartered and luxury liner Queen Elizabeth 2.