Japan clothing retailer bids $900 million for Barneys

Japan’s Fast Retailing Co. has offered $900 million in cash for Barneys New York, topping an earlier bid from a United Arab Emirates-based investment group, owner Jones Apparel Group Inc. said Thursday.

On June 22, Jones announced that it had agreed to sell the luxury retailer to an affiliate of Istithmar for $825 million. That offer was more than double what the New York-based apparel maker paid in December 2004 in its entry into luxury brands.

The deal had been expected to close during the third quarter of 2007.

Jones, whose brands include Nine West, Anne Klein and Evan-Picone, said Thursday that it would provide information to Fast Retailing and begin talks with the company, although the Istithmar deal remains in effect.

If Jones terminates the Istithmar agreement before July 22, it must pay a breakup fee of $20.6 million. Jones would be forced to pay $22.7 million if the deal is called off later.

Based in Yamaguchi City, Fast Retailing operates the casual clothing chain Uniqlo. The retailer has expanded aggressively overseas, including in Britain and continental Asia, with ambitions to challenge San Francisco-based Gap Inc. It opened its global flagship store in New York’s Soho area last September.

Fast Retailing first told Jones it was interested in acquiring Barneys last fall, according to the company. Acquiring Barneys would add to the company’s geographic and market diversification, Fast Retailing said.

Jones acquired Barneys three years ago amid a hot luxury market with aims of diversifying its portfolio. But Jones soon came to realize that expanding Barneys would require more capital investment than it had anticipated. Jones said last month that it planned to use the proceeds of the Barneys sale to invest in other brands and to boost shareholder value.

The heightened interest for Barneys is considered a victory for Peter Boneparth, Jones’ president and chief executive, who unsuccessfully put Jones up for sale last year. He was forced to take the company off the market when it didn’t fetch the price he was seeking.

Plenty of challenges remain for Jones as it struggles with a sluggish stock price and so-so sales in its moderate-price businesses.

Jones’ shares, which rose 20 cents to $28.60 on Thursday, have traded at $27.30 to $35.54 over the last 52 weeks.