US clothing giant Jones Apparel Group Inc is to acquire the producer of lei jeans for $310 million as it looks to strengthen its hand in the lucrative and fast-growing teen clothing market, it announced on Wednesday.

The deal for RSV Sport Inc and its related companies, lei, includes one million shares of Jones stock, valued at $37.5m, and $272.5m in cash, the New York-based firm revealed in a news release.

It added it will also take on $75 million of lei debt with the latter’s shareholders and some staff entitled to receive up to $70m in additional payments if certain earnings targets are achieved during the next three years.

Lei, a leading designer, manufacturer and distributor of girls’ and young women’s moderately priced jeanswear, enjoyed net sales of $248 million in 2001, with its products sold in stores including May Company, Federated, Nordstrom, JCPenney, Kohl’s and Sears.

Mel Geliebter, chief executive of lei, will also become chief executive officer of Jones’ Sun Apparel private label division.

Jones president and CEO, Peter Boneparth, commented: "In addition to the strong lei brand and excellent management team, we are acquiring a company that shares many of the Jones operating philosophies.

"These include: strong cost controls and operating margins, a commitment to working capital management, and an overall focus on maximising return on investment. It further provides us with additional product diversification into the junior arena, the fastest growing consumer demographic."

He added: "On a pro forma basis, the junior classification will represent approximately 11 per cent of projected 2002 revenues, the moderate component of our business will expand from approximately 23 per cent to 28 per cent of projected 2002 revenues, and our channel distribution to moderate national chains will also increase from 12 per cent to 15 per cent.

"Overall, Mel and his team have built a strong business and we are excited about the long-term potential of the lei brand as part of our existing branded portfolio."

Mr Geliebter added: "Partnering with Jones Apparel Group is a great opportunity to join a leader in the apparel industry that is committed to growing its moderates business.

"Lei has enjoyed a successful history as an independent company and we look forward to building upon our success as a member of the Jones family."