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Battle for Barneys Escalates

Jones Apparel accepts a fattened offer from Dubai's Istithmar, but it falls short of Fast Retailing's bid.

SAN FRANCISCO -- Jones Apparel Group (JNY) accepted a Dubai private-equity firm's fattened offer for Barneys, escalating a bidding war with Japan's Fast Retailing, which is also vying for the luxury brand.

Istithmar, the investment arm of the Dubai government, raised its Barneys buyout price to $942.3 million, which falls short of Fast Retailing's latest offer of $950 million. Jones, however, first agreed to sell the chain to Istithmar and would have to pay $34.7 million to sever its agreement.

Fast Retailing, owner of the Uniqlo chain, had originally put in an unsolicited bid of $900 million to edge out Istithmar's first offer of $825 million. But Istithmar came back with a matching bid, and Fast Retailing jacked up its offer.

Fast Retailing has until 5 p.m. EDT Thursday to counter Istithmar's latest bid.

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Barneys is known for its high-end fashion, with items such as a tie-front jacket selling for $795. Even its sales prices carry heft, such as a Christian Louboutin sling-back wedge marked down to $405 from $675.

Barneys was acquired by Whippoorwill Associates and Bay Harbour Management in 1999, after being bailed out from bankruptcy proceedings. Jones Apparel bought it in 2004 for $294.3 million in cash.

Shares of Jones were trading at $19.88, up 48 cents, or 2.5%.