The Jones Group Inc. (ticker: JNY, exchange: New York Stock Exchange (.N))
News Release -
Jones Apparel Group, Inc. and McNaughton Apparel Group Inc. Enter Into a Merger Agreement
NEW YORK, April 16 /PRNewswire/ -- Jones Apparel Group, Inc. (NYSE: JNY)
and McNaughton Apparel Group Inc. (Nasdaq: MAGI) today announced that they
have entered into an agreement pursuant to which Jones will acquire 100% of
the common stock of McNaughton in a merger transaction. McNaughton is a
leading designer, marketer and distributor of women's and junior's moderately
priced separates and collections of career and casual clothing with net sales
of $522 million for the trailing twelve months ended February 3, 2001.
McNaughton markets its products nationwide to department stores, national
chains, mass merchants, and specialty retailers, including JCPenney, Kohl's,
Federated, May Department Stores and Sears. Brands include Norton McNaughton,
Erika, Energie, Jamie Scott and Currants.
The transaction is valued at $21.00 per common share of McNaughton,
comprised of $10.50 in cash and approximately $10.50 in stock, based on a
fixed exchange ratio of .282 Jones shares per McNaughton share and based on
Jones' average share price over the 10 trading days prior to the signing of
the agreement. At $21.00, McNaughton's common equity is valued at
approximately $275 million (net of options costs). Including assumed debt of
$297 million as of February 3, 2001, the transaction has a total value of
approximately $572 million. McNaughton has approximately 15.8 million shares
outstanding, including stock options. The transaction is expected to close in
the third calendar quarter of this year, and is subject to customary closing
conditions, including approval by the shareholders of McNaughton and clearance
under the Hart Scott Rodino Act.
Sidney Kimmel, Chairman of Jones Apparel Group, stated, "This acquisition
is a perfect strategic fit for Jones. By merging with the best company in the
moderate business, we are able to accelerate our growth strategy to become a
leader in this market segment. We are pleased that Peter Boneparth, current
Chairman and Chief Executive Officer of McNaughton, will be joining Jones as
Chief Executive Officer and President of the McNaughton Apparel Division and
as a member of our Board of Directors. Peter provides the quality of
leadership that we believe will complement our existing Jones management team
and drive further expansion in the moderate channel."
Jacki Nemerov, President of Jones Apparel Group, commented, "We estimate
the addition of McNaughton will increase our revenue in the moderate channel
from 5% of total net sales in 2000 to 10% on a proforma basis. This
acquisition provides further diversification to Jones Apparel in terms of
distribution channel and customer, strengthening our presence on the moderate
floor of department stores such as Federated and May Department Stores, and in
national chains such as Kohl's, JCPenney and Sears."
Peter Boneparth, Chief Executive Officer of McNaughton Apparel Group,
stated, "We are very pleased to be joining forces with Jones Apparel Group.
We think this combination is highly attractive for both Jones and McNaughton.
By leveraging Jones' competencies in areas such as footwear, accessories and
denim, we will be able to enhance the growth of our three sportswear
divisions: Norton McNaughton, Miss Erika and Jeri-Jo. We believe that
McNaughton can provide established sourcing, production and marketing
expertise within the moderate channel to benefit Jones Apparel in their own
moderate brands of Joneswear, Evan-Picone and the upcoming launch of Nine &
Company planned for fall 2001. McNaughton's shareholders will receive an
excellent value for their investment and will have a strong continuing
interest in a great company."
Wesley Card, Chief Financial Officer of Jones Apparel Group added, "This
merger meets all of our acquisition criteria: strong management, powerful
brands, channel diversification, and solid core growth. Under the leadership
of Peter Boneparth and his team, McNaughton has delivered double digit sales
growth and dramatic improvement in profit margins. This acquisition is a key
element for our growth and diversification strategy and will enhance our
growth in the moderate channel. We expect this addition to be accretive to
Jones' earnings in the first year."
The actual number of shares of Jones stock, in addition to $10.50 in cash
consideration to be exchanged for each McNaughton common share, shall be (i)
.282 if the average Jones stock price for the five trading days period ending
on the second trading day prior to the closing is greater than or equal to
$29.78 and less than or equal to $44.68, (ii) equal to $12.60 divided by the
average Jones stock price if the average Jones stock price is greater than
$44.68, or (iii) equal to $8.40 divided by the average Jones stock price if
the average Jones stock price is less than $29.78.
Morgan Stanley acted as financial advisor to Jones, and Merrill Lynch
acted as financial advisor to McNaughton. Cravath, Swaine & Moore is legal
counsel to Jones, and Torys is legal counsel to McNaughton.
Jones Apparel Group and McNaughton Apparel Group would like to invite
investors to listen to a broadcast of the Company's conference call discussing
this merger. The call will be broadcast live over the Internet on Monday,
April 16, 2001 at 3:00 p.m. (EDT) and can be accessed by visiting the investor
relations web page at http://www.jny.com.
Jones Apparel Group, Inc. (www.jny.com) is a leading designer and marketer
of branded apparel, footwear and accessories. The Company's nationally
recognized brands include: Jones New York; Lauren by Ralph Lauren, Ralph by
Ralph Lauren, and Polo Jeans Company, which are licensed from Polo Ralph
Lauren Corporation; Evan-Picone, Rena Rowan, Todd Oldham, Nine West, Easy
Spirit, Enzo Angiolini, Bandolino and Napier. The Company also markets
costume jewelry under the Tommy Hilfiger brand licensed from Tommy Hilfiger
Corporation. Celebrating more than 30 years of service, the Company has built
a reputation for excellence in product quality and value, and in operational
This press release contains "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. These statements are based
on current expectations of future events and are subject to a number of
factors and uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. These factors and
uncertainties include: the risk that Jones Apparel's and McNaughton's
businesses will not be integrated successfully, failure of McNaughton
shareholders to approve the merger, national and regional economic conditions,
the overall level of consumer spending, the performance of the products within
the prevailing retail environment, retail conditions for women's and juniors'
apparel, customer acceptance of new designs, effects of vigorous competition,
changes in the costs of raw materials, labor and advertising and the ability
to secure and protect trademarks and other intellectual property rights. For
a detailed discussion of these and other factors and uncertainties, please see
Jones Apparel's and McNaughton's filings with the Securities and Exchange
Commission, including the "Statement Regarding Forward Looking Disclosure" in
the Jones Apparel Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, and the "Safe Harbor Statement under the Private Securities
Litigation Reform Act of 1995" in Item 7 of the McNaughton Annual Report on
Form 10-K for the fiscal year ended November 4, 2000. Neither Jones Apparel
nor McNaughton assumes any obligation to update any forward-looking statements
as a result of new information or future events or developments.
Jones Apparel and McNaughton will file a proxy statement/prospectus and
other documents regarding the proposed acquisition described in this press
release with the Securities and Exchange Commission. Investors and security
holders are urged to read the proxy statement/prospectus when it becomes
available, because it will contain important information about Jones Apparel,
McNaughton and the proposed transaction. A definitive proxy
statement/prospectus will be sent to security holders of McNaughton common
stock seeking their approval of the transaction. Investors and security
holders may obtain a free copy of the definitive proxy statement/prospectus
(when available) and other documents filed by Jones Apparel and McNaughton
with the SEC at the SEC's web site at www.sec.gov. The definitive proxy
statement/prospectus and other documents may also be obtained for free by
directing a request to:
Jones Apparel Group, Inc.
250 Rittenhouse Circle, Keystone Park
Bristol, PA 19007
Attn: Investor Relations
Tel: (215) 785-4000
McNaughton Apparel Group Inc.
463 Seventh Avenue
New York, NY 10018
Attn: Investor Relations
Tel: (212) 947-2960
SOURCE Jones Apparel Group, Inc.
Web site: http: //www.jny.com
CONTACT: Wes Card, Chief Financial Officer, or Anita Britt, Senior Vice President, Finance and Investor Relations, of Jones Apparel Group, 215-785-4000; or Peter Boneparth, Chairman and Chief Executive Officer, or Amanda Bokman, Chief Financial Officer, of McNaughton Apparel Group, 212-947-2960