Dubai’s Istithmar plans expansion for Barneys

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Dubai's Istithmar said it could consider launching Barneys New York Inc. in markets such as China and the Middle East if it completes a deal to buy Jones Apparel Group Inc.'s (JNY.N: Quote, Profile, Research) luxury retailer.

Istithmar considered its $825 million bid for Barney's a "full offer" and would wait until next month to find out whether it had succeeded against an unsolicited $900 million offer from Japan's Fast Retailing Co. Ltd. (9983.T: Quote, Profile, Research), the state-owned investment agency's chief executive said.

Jones Apparel Group Inc. signed an agreement with Istithmar under which it could consider rival bids for Barneys until July 22. Any bids for the Jones Apparel Group, which put itself up for sale last year, can be made before August 11.

Istithmar Chief Executive David Jackson declined to comment on whether he would consider a higher offer for Barneys or a bid for Jones Apparel Group.

"At this point we think our offer is a full offer. We think it reflects full value for the company," Jackson told Reuters in an interview, reiterating what Istithmar said when the counter-bid was announced earlier this month.

"This is the way the market works and you can't get worked up about this stuff. You just have to wait for their best and final (offer) and then you decide what you do at that point."

Jones, which owns clothing, shoes and accessories brands such as Nine West, Gloria Vanderbilt and Jones New York, agreed in June to sell Barneys to Istithmar.

Jones then said it would provide financial information to Fast Retailing and begin talks with the Japanese clothing company, although its agreement with Istithmar remained in effect.

Jones would have to pay Istithmar $22.7 million if it terminates their agreement after July 22.  Continued…
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Istithmar, whose investments on behalf of the Dubai government include a stake in Standard Chartered Plc. (STAN.L: Quote, Profile, Research), hopes Barney's will help it tap growing demand for luxury retail goods in the United States and beyond, Jackson said.

"The luxury market is outperforming every other class and if you look at the square footage in the United States that is dedicated to luxury…it is understored," he said.

"We think there is an opportunity for expansion and additional things for Barneys just in the U.S," he said.

He said growing wealth in markets such China or the oil producers of the Middle East also hold opportunities for Barneys, which has more than 30 outlets in the United States.

"That same story is being told in other parts of the world but even more dramatically. (With) the number of high net-worth individuals being created in the Middle East and China and other places…we see that there is an even greater market for Barneys," he said.

Jones agreed to buy Barneys in 2004 for $400 million, moving a company that supplied clothes and shoes to mall department stores and discounters in to the luxury retailing market.

Source : Reuters

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