Barneys Sale to Dubai Private Equity Firm Close

NEW YORK – Jones Apparel Group Inc. (JNY) is close to a deal to sell Barneys New York luxury department store chain for $825 million to Dubai's private equity firm Istithmar, sources familiar with the situation said Friday.

An announcement of the long-awaited deal could come as early as Friday, but negotiations have dragged on for several weeks and the deal could be delayed by a few more days, one source said.

Jones Apparel did not immediately return a call seeking comment. A spokeswoman for Istithmar in Dubai declined to comment, saying that Friday was a day of prayer and rest in Dubai.

A sale of Barneys would unwind one of the biggest moves made by Jones Apparel's Chief Executive Peter Boneparth.

The company agreed to buy Barneys in 2004 for $400 million, a move which puzzled analysts and investors since the luxury retailer seemed an unlikely fit for Jones Apparel, whose clothes and shoes fill the racks of mall department stores and discounters.

Under Boneparth's tenure, Jones Apparel also bought Maxwell Shoe, juniors denim brand LEI, Gloria Vanderbilt Apparel Corp., jeans-maker RSV Sport Inc., and women's suit and sportswear company Kasper Ltd. Many of these deals failed to perform as expected and now look like missteps, analysts said.

The company said in April that Boneparth's contract would expire on March 31, 2009, and it would not be renewed.

Jones Apparel, like other apparel makers, has been squeezed by consolidation in the department store sector, which reduced the number of potential clients and increased pressure among vendors fighting for floor space.

The company put itself up for sale last year, but failed to find a buyer.

Istithmar, which has a global real estate portfolio valued at $7 billion to $8 billion, including prime properties in London and New York, has been aggressively buying U.S. property and other assets over the past year.

The investment firm owns off-price apparel retailer Loehmann's Holdings Inc. and a major stake in the Mandarin Oriental New York hotel.