In its first foray into the luxury market, the shoe and clothing marketer Jones Apparel Group Inc. is buying upscale clothier Barneys New York Inc. for $294.3 million in cash.
Barneys, which operated for two years in the late 1990s under bankruptcy protection, has been exploring its options for several months.
"America is getting poorer and richer at the same time. Catering to the truly wealthy people is a real opportunity for this company," said Peter Boneparth, president and chief executive at Jones, during a conference call with analysts.
Under the deal announced Thursday, Jones, based in Bristol, Pa., will pay $19 per share to Barneys stockholders. In addition, it will assume about $106 million in Barneys debt.
The boards of both companies have approved the transaction, and stockholders of Barneys owning approximately 75 percent of its common stock have indicated they support the deal. No further stockholder action will be required to approve the transaction.
The offered price is below Barneys' closing price of $20.05 in over-the-counter trading on Wednesday. But the shares are very lightly traded and were changing hands at $18 a share in mid-October.
Barneys shares fell $1.20, or 6 percent, to close at $18.85 in over-the-counter trading Thursday, while Jones shares lost $1.06, or 3 percent, to close at $34.92 on the New York Stock Exchange.
In June, Barneys said it was exploring strategic alternatives that could include the sale of the company. The retailer had retained investment banking firms Morgan Stanley and Peter J. Solomon Co. as financial advisers.
The acquisition is the latest for Jones Apparel, which generated $4.3 billion in sales last year and has snapped up a number of companies over the past several years in an effort to diversify its portfolio. The companies include Evan-Picone; Gloria Vanderbilt; Kasper, which owns the Anne Klein label; Norton McNaughton Group Inc., a mid-price apparel manufacturer, and Nine West Group.
Boneparth told investors that acquiring Barneys allows Jones to get into an area that is not vulnerable to economic woes and is "bulletproof." At the same time, it allows Jones to expand into the retailing of other companies' labels. Jones operates more than 700 stores that sell its own brands.