DFS Group Won’t Make Offer for Bankrupt Barney’s

DFS Group on Monday said it won’t bid for Barney’s Inc., dashing the bankrupt retailer’s hopes for a sweeter purchase price.

DFS, the San Francisco-based unit of Paris-based LVMH Moet Hennessy Louis Vuitton and operator of duty-free shops, said that while it had negotiated with Barney’s management and creditors, some creditors demanded too much money and had an “unrealistic view” of the value of the New York-based company.

“Accordingly, while we continue to admire Barney’s for its unique relationship with customers and vendors, we have decided not to pursue this acquisition,” said DFS Chairman Myron Ullman.

Barney’s, which entered Chapter 11 bankruptcy proceedings in 1996, has received a bid from Hong Kong-based Dickson Concepts International to buy 51% of the retailer for $322 million in cash, debt and equity.

The offer ran into snags, however, because Barney’s unsecured creditors were expecting at least $350 million and couldn’t agree on how to divide the purchase price among themselves.

DFS said in December that it was considering making an offer for the tony fashion retailer. That boosted creditors’ hopes. “It’s disappointing that DFS has decided not to bid,” said David LeMay, attorney for Isetan Co. Isetan provided $600 million to build Barney’s biggest stores in Beverly Hills, New York and Chicago.

Barney’s, which operates nine specialty clothing stores and 13 smaller outlet stores, has until March 11 to file a plan to exit bankruptcy proceedings.

DFS operates more than 150 duty-free shops in 16 countries.