Jones Apparel Group, Inc. announced that it has entered into a definitive stock purchase agreement to sell its Polo Jeans Company business to Polo Ralph Lauren Corporation. The Company and Polo Ralph Lauren Corporation have also entered into a settlement and release agreement to settle the pending litigation between the respective parties, including a former Jones executive, upon closing of the stock purchase agreement. Jones Apparel Group, Inc. will receive an aggregate $355 million in cash at closing, which is expected in early February 2006. Jones will also retain the distribution and product development facilities located in El Paso, Texas, along with certain working capital items, including accounts receivable and accounts payable. Polo Ralph Lauren Corporation will acquire the stock of a Jones wholly-owned subsidiary whose primary assets include the Polo Jeans license, inventory, a New York operating lease for administrative/showroom space and certain other assets.
Peter Boneparth, President and Chief Executive Officer, Jones Apparel Group, Inc., stated, "We are very pleased to resolve these outstanding matters. This agreement will allow Jones Apparel to focus all of its energy and resources on pursuing its strategic plan to enhance shareholder value. The Polo Jeans license imposed certain operating restrictions on Jones Apparel, including, the sale of certain
|
| competing product. Additionally, we recognize it also created uncertainty due to Polo Ralph Lauren Corporation's contractual right to acquire the license in 2010 at 80% of fair market value." Wesley Card, Chief Operating and Financial Officer, added, "Unaudited 2005 net revenues for Polo Jeans Company approximated $300 million. We estimate the business contributed approximately $42 million of pre-tax profit in 2005. As a result of this transaction, we expect to incur various one-time items during 2006 that we plan to identify and report on a quarterly basis. Additional financial details will be provided in mid-February during a conference call to review our fourth quarter and full year 2005 results."
Mr. Boneparth concluded, "This transaction affords us the strategic and financial flexibility to continue executing our multi-brand, multi-channel business model. Jones Apparel will pursue opportunities to expand the product offerings of our various brands, as well as evaluate strategies to redeploy the cash proceeds of this transaction including acquisitions and share repurchase, or a combination of the two." Closing of the transaction is subject to certain customary conditions, including the expiration or early termination of all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act. Bear, Stearns & Co. Inc. provided financial advisory services to the Company. Cravath, Swaine & Moore LLP provided legal counsel to the Company. 
|
|
