Jones to Buy Mid-Price Maker McNaughton

Jones Apparel Group Inc., the maker of Jones New York and other clothing lines, agreed to buy McNaughton Apparel Group Inc. for $275 million in cash and stock to increase sales of mid-price garments. Jones Apparel said it will pay $10.50 in cash and about $10.50 in stock for each McNaughton share and will assume $297 million in debt. Shares of McNaughton rose $2.47, or 14%, to close at $19.87 on Nasdaq. Jones Apparel, which has been buying jewelry, shoe and other companies to expand beyond business clothing, said McNaughton will boost its sales at mid-price retailers such as Sears, Roebuck & Co. and Kohl’s Corp. to 10% of revenue from 5%. New York-based McNaughton Apparel, which makes women’s and juniors’ clothing under Norton McNaughton, Erika and other brands, had $522 million in sales in the year ended Feb. 3. Jones Apparel had sales of $4.14 billion last year. Shares of Bristol, Pa.-based Jones Apparel slipped 20 cents to close at $35.75 on the NYSE.