"We won't make another proposal," Fast Retailing spokesman Takashi Igarashi said yesterday. "The price we suggested was very different from what they had in mind."
Jones Apparel Group, the owner of Barneys, accepted a sweetened bid for the unit from Istithmar.
Fast Retailing, which operates the Uniqlo casual clothing chain, had until 5pm New York time Thursday to make an improved offer.
Chief executive Tadashi Yanai, Japan's eighth-richest man, has had little success reducing the company's reliance on earnings from Uniqlo, which accounts for 85 percent of sales.
Shares of Fast Retailing, Asia's largest clothing retailer, rose the most in almost four years yesterday as investors bet it would not raise its offer.
Istithmar may add to the seven Barneys locations, which sell Helmut Lang clothes and Fendi handbags.
Istithmar said in February that it will spend US$1.7 billion this year buying retail, industrial and financial-services companies. Since 2003, the firm has acquired New York properties including the W Hotel Union Square and a US$1 billion stake in London-based bank Standard Chartered (2888).
Jones chief executive Wesley Card is shedding sportswear brands to focus on Jones New York, Anne Klein and Nine West.
Jones agreed in June to sell Barneys to Istithmar for US$825 million. Two weeks later, Fast Retailing offered US$900 million, which Istithmar matched on August 5. Later that day, Fast Retailing countered with a higher bid of US$950 million.
Barneys, whose rivals include Neiman Marcus Group, also runs 14 Co- Ops stores that target younger shoppers and feature brands such as Theory. In addition, the company has 13 outlets. Barneys does not have any international locations.
The retailer has outpaced discount and department stores in sales growth. Revenue at stores open at least a year climbed 10 percent in the first quarter, compared with a 0.6 percent gain for Macy's, the second-largest US department-store chain.
Jones acquired Barneys in 2004 for US$291.3 million and repurchased US$106 million in debt.
Separately, state-owned Borse Dubai has offered to buy at least 25 percent of Nordic bourse owner OMX at 230 crowns (HK$266.38) a share, topping Nasdaq's per share full takeover bid and fueling expectations of a battle.
Shares in the Swedish company surged after Borse Dubai, a holding firm that pools Dubai's stakes in the Dubai Financial Market and the Dubai International Financial Exchange, launched a book-building to buy OMX shares.
The price was above the current value of Nasdaq's stock-and-cash offer, which is now worth around 200 crowns per share or US$3.7 billion overall, and sent OMX shares nearly 6 percent higher to 230 crowns. BLOOMBERG, REUTERS
