Dubai-based investment fund Istithmar finally won the bidding for the specialty retailer on Thursday after rival Fast Retailing Co. Ltd. of Japan decided to drop out. As reported, Istithmar will pay Jones Apparel Group, Barneys' parent, $942.3 million in the all-cash deal. According to Jones, the deal is expected to close in the third quarter of this year.
Now the fund faces the task of earning its investment back — and it already has indicated that will be via store openings mainly in the U.S. and, perhaps eventually, overseas.
"We are excited to acquire Barneys New York," said H.E. Sultan Ahmed Bin Sulayem, executive chairman of Istithmar, in a statement. "Barneys is a unique global asset with incredible growth prospects within the luxury market. We look forward to working with Barneys as both a financial and strategic partner. We intend to grow the company in the U.S. and in international markets."
David Jackson, chief executive officer of Istithmar, added in a telephone interview: "What is attractive about Barneys is its terrific management team and their tremendous longevity across all major positions. Our thoughts [are] to support the management team in executing its business plan in the U.S. market....We are talking about other things to further capitalize on the strength of the management team.
"It's a collaborative effort with management," he emphasized.
Howard Socol, ceo of Barneys, will stay on, as well as members of his team. Socol signed a new employment agreement with Istithmar in June. Specifics of the agreement were not disclosed.
"Istithmar and the emirate of Dubai have a long-term perspective for Barneys and the value creation it is capable of. They are big believers [in Barneys]," said Marc Cooper of Peter J. Solomon Co., the investment banking firm advising Istithmar.
Barneys is about ready to launch its flagship in San Francisco, with a Las Vegas flagship set to open a few months later, said Jackson.
When asked about Barneys perhaps having a larger online presence, Jackson said the "Web site would be an opportunity for them to do more business online....The online business is an opportunity to reach new markets and further enhance the brands."