mobanmarketLuxury department store Barneys New York will definitely be acquired by Istithmar, the invesmtnent firm of the Dubai government. At a sale price of $825 million, Barneys is now worth more than double what it was when current owner, Jones Apparel Group, purchased the company in December 2004. Jones expects the deal to be finalized in the third quarter of this year.
“We are very pleased to enter into this transaction, which realizes significant value for our investment in Barneys and provides us with the opportunity to use the net proceeds to enhance shareholder value,” Peter Boneparth, president and chief executive of Barneys, said in a statement. He added that the proceeds from the sale – which the company expects to be about $770 million after tax and transaction costs, but with tax benefits – will be re-invested into the company’s existing portfolio of brands, including Nine West, Anne Klein and Evan-Picone.
The sale is believed to be a coup for Boneparth, who unsuccessfully tried to offload the luxury company last year. Jones could definitely use the cash injection from this sale to improve its less than stellar stock price and slow sales. Boneparth also repeated his intention of selling some of the group’s moderate-priced apparel businesses, which have suffered as a result of consolidation in the department store industry.
For Istithmar, who has been aggressively buying companies in the consumer, industrial and financial services sectors since it was founded three years ago, the acquisition of Barneys signals its first foray into luxury goods. “This investment will further our continued focus on the retail sector,” Istithmar chief executive David Jackson said in a statement. “We believe that we will be able to accelerate the growth of Barneys’ business by leveraging our experience in the sector and other investments worldwide.”