Japanese firm drops Barneys bid

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Japan's Fast Retailing has pulled out of the race to buy US store chain Barneys, clearing the way for Dubai's Istithmar to acquire the business.

Fast Retailing withdrew its bid after Istithmar raised its bid for the clothes retailer to $942.3m (£462.6m).

The offer was below Fast Retailing's $950m bid but topped Istithmar's $825m offer originally accepted in June.

Jones Apparel, Barneys' parent firm, agreed to Istithmar's initial offer and pulling out would have cost it $34.7m.

'Economic sense'

The two contenders have been battling it out since June, when Istithmar's original offer was given the go-ahead.

Istithmar - a private equity firm which is part of conglomerate Dubai World - has already made a number of investments in the US, including the Loehmann's chain.

Fast Retailing has been successful in Japan through its store chain Uniqlo, specialising on basic, own-brand items of clothing such as T-shirts and jeans.

But analysts said the firm was looking overseas for future growth.

A Fast Retailing spokesman said there was a "disparity" between the price it would have to pay and the firm's inherent value.

"It is no longer rational from an economic standpoint," he said.