Jones Apparel sells Polo Ralph Lauren brand for $355mn
23 Jan '06
3 min read
Apparel retailer Jones Apparel Group Inc 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. It 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 uncertaintydue to Polo Ralph Lauren Corporation's contractual right to acquire the license in 2010 at 80% of fair market value."
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