Jones (JNY) announced late Tuesday that it would purchase Nine West (NIN) for $885 million in stock and cash and assume more than $500 million in debt.
There had been rumors on Wall Street over the last month that a Nine West-Jones deal was likely. Both cater to the middle-market consumer, especially professional women looking for classy, yet affordable merchandise for both work and play.
Jones was down 3 to 22 15/16 in trading early Wednesday afternoon. Nine West was up 7/16 to 23 1/4.
Jones, which is best known for its Jones New York, Saville and Evan-Picone labels, has been on a buying spree in the past year to build itself into a multibrand conglomerate.
Its recent purchases include Sun Apparel, which makes Ralph Lauren's Polo jeans. It also owns the license for Lauren by Ralph Lauren, a top-selling mid-priced women's label at department stores.
Just last month, it acquired the trademark for designer Todd Oldham, which it plans to develop into a fashion brand for the teen market.
"Nine West meets all of our acquisition criteria," said Sidney Kimmel, chairman of Jones in a statement Tuesday night. "The company has many strong brands, such as Nine West, Easy Spirit and Enzo Angiolini; excellent product quality and consistency; and leading market positioning."
At the same time that Jones is expanding, Nine West has been trying to get its business back in order. While Nine West estimates it sells 20 percent of all women's shoes sold in the United States, the company still has struggled to reduce costs and improve its profitability.
Nine West sells its shoes and accessories, like purses, socks and sunglasses, through department stores, independent shoes stores and more than 1,500 retail stores, which it operates.
Since November, the White Plains, N.Y.-based company has eliminated about 6 percent of its total work force of 13,000.
In addition, Nine West was named earlier this year in a price-fixing lawsuit, which claimed the company and several large department store chains kept shoe prices artificially high for years on 12 brands of women's shoes.
The deal is expected to be completed by the end of June. Under the buyout agreement, Jones will exchange .5011 of a share of its stock and $13 in cash for each Nine West Group share.
Once the deal is complete, Nine West chairman Jerome Fisher and chief executive Vincent Camuto will be replaced at the helm of the company by Mark Schwartz, a former Merrill Lynch investment banker who was responsible for the initial public offerings of both Jones and Nine West.
Schwartz will leave his current position as president of the leverage buyout firm Palladin Capital Group, which acted as the financial advisor on tis deal for Jones. Fisher will remain a consultant with Nine West, while Camuto will be involved with design and merchandising.
Written By Rachel Beck, AP Business Writer