Tomahawk, WI 12/23/2013 (BasicsMedia) – Most everyone in Wall Street know that it has been a long and sometimes challenging auction run for  The Jones Group Inc. (NYSE:JNY) by Citigroup (NYSE:C). It a deal was finally announced last week.

The shoes and apparel company will be taken private by a private equity company Sycamore Partners LLC. For the purchase, Sycamore will pay $15 per common stock of The Jones Group Inc. (NYSE:JNY). This is expected to fetch a total of $1.2 billion in cash transaction. However, the total value of the transaction will be around $2.2 billion given the outstanding net debt of $1 billion.

Citigroup was involved in sourcing for the buyer and it delivered just that after a lengthy campaign. The reason taking Jones Group Inc. (NYSE:JNY) wasn’t an easy ride was due to the fact that the company owns a multitude of brands.

The brands

The company owns Jones New York and Nine West fashion brands. It designs and markets designer shoes and a lot of other fashion items. In recent years the company made tweaks to its operations in which it sought to produce high-end shoes in efforts to attract the financially secure market.

However, the going has not been smooth given the competition and high operating expenses. These have resulted in slow growth and sometimes declining profits.

To take the company private, CEO Wesley Card acknowledged last week that it took diligent analysis and thoughtful strategic deliberations. So does this mean that the deal is a sweet one for the shareholders?

The most definitive answer to this will obviously come out when the matter is put to the shareholder decision. However, $15 per share, it seems like a perfect deal. The Jones Group Inc. (NYSE:JNY) has a year’s high of $17.78 and looking its performance in latest months, the stock was not going to hit this high and this makes the price offering a good deal. In fact, $15 per share is miles away from the year’s low of $10.42 per share.

Going into safe hands?

Some investors may wish to follow The Jones Group Inc. (NYSE:JNY) and the next question would be whether the company is going into safe hands. The acquiring company Sycamore is based in New York and it is a private equity firm. Sycamore has recently acquired about two other fashion companies including Talbot and Hot Topic, a company with appeal to the young people.

Looking at this string of acquisition, one is tempted to believe that Sycamore is having good plans for these fashion entities. And so the conclusion that The Jones Group Inc. (NYSE:JNY) is going into safe hands. That the company is being taken in all cash transaction also says something about the acquiring firm’s cash flow position.

Failed joint bid

It is emerging that The Jones Group Inc. (NYSE:JNY) was always going to be taken over in a joint venture between Sycamore and KKR. But KKR dropped out of the joint venture talks, leaving Sycamore to go it alone. After the dropout of KKR, Sycamore hired Citigroup to evaluate the buy options and this was done diligently for up to five months.

The stock of The Jones Group Inc. (NYSE:JNY) jumped more than 5 percent in last Friday’s trading after the new about the sale deal was broken. This indicates significant investor approval for the deal. The deal closes in the second quarter of 2014.

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