Jones Apparel Gets Hostile

The ongoing story of Jones Apparel Group's (NYSE: JNY  ) attempt to buy Maxwell Shoe (Nasdaq: MAXS  ) took another twist today. Jones, apparently unable to get Maxwell back to the negotiating table, will attempt a hostile buyout of the company. In doing so, Jones insists that it's offering a fair price at $20 per share in cash, exactly where it was when news of its interest was first reported just about a month ago.

Maxwell has already shot down one unsolicited overture from Jones. Now, Jones is now going directly to Maxwell's stockholders in an attempt to acquire a majority stake on the open market. If it succeeds, Jones would presumably then try to buy out the remaining stockholders at the same price.

This story becomes increasingly interesting with the recent turn of events. Investors, upon hearing of Jones' initial interest, have bid Maxwell's shares ahead of Jones' offer price -- hoping, it appears, that either the companies would come to a friendly resolution at a higher price, or Jones would boost its offer in making a tender such as this one. Neither has happened, and Maxwell's management will almost certainly recommend that its stockholders decline Jones' offer. (A formal response from Maxwell was not available at the time of publication.) Investors who purchased above $20 will no doubt agree.

Maxwell investors have until midnight on April 19 to decline or accept Jones' offer, though tenders can be extended. Its shares rose slightly this morning on strong volume, perhaps an indication that Maxwell investors will support management. Although, it could be simply a reflection of their hopes to avoid getting burned.

It's impossible to guess what Jones might do should it not accumulate enough shares in the tender, but Jones has given investors at least one very good clue. In a February conference call (transcript courtesy of CCBN/StreetEvents), CFO Wesley Card said Jones is "very disciplined in our approach to valuation," adding that its offer represents "an appropriate and fair price for the company."

The statement was filed well before today's news came out, but Jones is clearly sticking to its guns -- for now, at least.

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Fool contributor Dave Marino-Nachison doesn't own any of the companies mentioned in this story.