Jones, Maxwell Negotiate

In a news release that was oddly reminiscent of the big-city dating scene, Jones Apparel Group (NYSE: JNY) yesterday announced that what has amounted to nearly four months of acrimony has finally evolved into "negotiations" now that it appears Jones has offered Maxwell Shoe (Nasdaq: MAXS) enough money.

To sum up: Jones offered $20 per share in cash in an unsolicited bid in February; Maxwell balked. Jones tried a hostile takeover a month later; Maxwell told its investors to stay away, and they did. Jones bumped its offer to $22.50 in late May; a while later, Maxwell shot back with a statement calling the second offer, like the first, "financially inadequate."

And yesterday, Jones unexpectedly said it's in "talks" with Maxwell's management about a $23.25-per-share offer, subject to the companies hammering out a merger agreement, Maxwell's board approving it, and all of this happening before Friday. (Jones' tender offer is set to expire Friday, and Jones is demanding that it either have a merger agreement in its hot little hand or Maxwell investors tender enough shares to it that it can reshape Maxwell's board in its image by that date.)

This is a perfect illustration of the sort of chicken game (makes you think of the tractor duel in Footloose, doesn't it?) that hostile and/or unsolicited buyout offers often represent: They're invariably exciting to watch, but can be nerve-racking if you've got something invested. These kinds of offers have been in the news a lot lately, from Oracle's (Nasdaq: ORCL) attempts to buyPeopleSoft (Nasdaq: PSFT) to Wine Group's efforts to keep Golden State Vintners' (Nasdaq: VINT) management from taking the company private on the cheap.

Sometimes the companies reach a deal; sometimes they come to an impasse; and sometimes a white knight comes in and plucks the takeover target out of the would-be acquirer's grasp, as Aventis (NYSE: AVE) hoped Novartis (NYSE: NVS) would do before it gave in to Sanofi-Synthelabo (NYSE: SNY). (In that case, the white knight rode off into the sunset without the princess.)

Given the publicity that such discussions sometimes get, it can be tempting for investors to attempt to "play" hostile deals for quick gains, but beware: Some research suggests that deals of this sort -- and the negotiations that accompany them -- reflect conscious strategic maneuvers (pdf file) most individual investors aren't privy to. That adds an extra layer of challenge to any analysis of a potential deal and both its short- and long-term impact.

Fool contributor Dave Marino-Nachison misses Grandpa Harold. He owns shares in Oracle.