Jones Apparel Group Inc has received an unsolicited offer for its Barneys New York subsidiary from Japanese apparel group Fast Retailing Co, the owner of the Uniqlo casual clothing chain, for $900m in cash - beating an $825m deal already inked with Dubai-based private equity house Istithmar.

Jones Apparel said in a statement on Thursday (5 July) that it will provide financial information and begin talks with Fast Retailing.

But it stressed that the $825m offer agreed on 22 June with Istithmar, the Dubai government's investment arm, has not been terminated and remains in "full force and effect."

However, if Jones decides to terminate the Istithmar agreement in favour of Fast Retailing, it will have to pay a termination fee of $20.6m, or $22.7m if Jones terminates the Istithmar agreement after 22 July.

This latest twist in the negotiations extends what have been nearly non-stop talks to sell Jones or Barneys, its department store arm which operates 14 Barneys stores as well as 14 Co-op units and 13 outlet stores. However, even though a sale was agreed with Istithmar, the door was left open for other offers, both for Barneys and for the entirety of Jones Apparel.
 
Jones acquired Barneys in November 2004 through the acquisition of the store's stock for $294.3m and an additional $106m in funds for a tender offer of Barneys senior secured notes due in 2008.

Although some expected Barneys to be sold for as much as $1bn, the $900m price tag will mean that Jones, under the leadership of CEO Peter Boneparth, will have more than doubled its money in a little more than 30 months.

Upon consummation of the Barneys divestiture, Jones would return to a business model dominated by wholesale brands and their affiliated retail operations. Among its major brands are Jones New York, Evan-Picone, Norton McNaughton, Gloria Vanderbilt, l.e.i., Nine West and Anne Klein.

Fast Retailing said in a statement that it sees attractive long term growth potential for Barneys as well as synergy with the rest of its group, which includes Uniqlo, Theory, Comptoir des Cotonniers, and Princesse tam.tam.

Fast currently operates 1,800 specialty stores in over 12 countries - including 750 Uniqlo stores in Japan, the US, UK, China, South Korea, and Hong Kong - and generated a profit of JPY70.3bn (US$586m) in the year ended August 2006.