BY Fraser Tennant
In a deal that gives them stronger negotiating power with vendors and greater ability to control costs, Saks Fifth Avenue parent HBC will acquire department-store chain Neiman Marcus for a total enterprise value of $2.65bn.
HBC is financing the deal via a $1.15bn fully committed term loan financing from investment funds and accounts managed by affiliates of Apollo, and a $2bn fully committed revolving asset-based loan facility from Bank of America, Citigroup, Morgan Stanley, RBC Capital Markets and Wells Fargo.
The deal has been struck at a time when luxury retailers are battling slowing demand as high interest rates and inflation force customers to reduce budgets, following a luxury retail boom after the coronavirus (COVID-19) pandemic.
Upon the close of the transaction, HBC will establish Saks Global, a combination of world-class luxury retail and real estate assets, including Saks Fifth Avenue, Saks OFF 5TH, Neiman Marcus and Bergdorf Goodman – each of which will continue operations under their respective brands.
“We are thrilled to take this step in bringing together these iconic luxury names,” said Richard Baker, executive chairman and chief executive of HBC. “For years, many in the industry have anticipated this transaction and the benefits it would drive for customers, partners and employees.”
The boards of directors of HBC and Neiman Marcus Group have approved the transaction.
“This transaction is a testament to our team's unwavering commitment to building rewarding customer relationships, driven by our differentiated business model,” said Geoffroy van Raemdonck, chief executive of Neiman Marcus Group. “We believe this is a proactive choice in an evolving retail landscape that will create value for our customers and brand partners.”
The transaction is subject to the receipt of required regulatory approvals, and other customary closing conditions. Until closing, the companies will continue to operate separately.
Mr Baker concluded: “This is an exciting time in luxury retail, with technological advancements creating new opportunities to redefine the customer experience, and we look forward to unlocking significant value for our customers, brand partners and employees.”
News: Saks owner to buy luxury retailer Neiman Marcus in $2.65-billion deal