Apparel retailer Talbots Inc. (TLB) Monday agreed to buy retailer J. Jill Group Inc. (JILL) in a deal worth around $517 million, spurning a takeover bid by Liz Claiborne Inc. (LIZ).

Talbots will acquire J. Jill's outstanding shares for $24.05 per share in cash, a 25 percent premium over the closing price of J. Jill shares Friday. Liz Claiborne had offered to pay $18 per share for the company.

Talbots said it will finance the deal with amounts drawn under a new $400 million credit facility and cash on hand. The company also said the deal is expected to add to earnings in fiscal 2007.

J. Jill, a specialty retailer of casual women's apparel, will continue to operate under its name and will keep its headquarters in Quincy, Massachusetts. Talbots, based in Hingham, Massachusetts, primarily focuses on women aged 35 to 50, but also sells clothing for children and men.

The deal is expected to close in the second quarter of 2006.

J. Jill and Liz Claiborne had been in merger discussions prior to the Talbots offer.

Liz Claiborne launched its unsolicited bid for J. Jill in November.

The following month, Liz Claiborne said it had entered into a confidentiality agreement with J. Jill, allowing it access to J. Jill's proprietary financial information.

Liz Claiborne said Monday it was disappointed that J. Jill had spurned its takeover bid.

Liz Claiborne said it was financially disciplined and would not overpay to buy J. Jill.