Saks owner HBC to acquire American retailer Neiman Marcus for $2.65 bn

Upon transaction close, 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.

Current Saks.com CEO Marc Metrick will become CEO of Saks Global, leading Saks Global’s retail and consumer businesses and driving the strategy to advance the luxury shopping experience.

“We're thrilled to take this step in bringing together these iconic luxury names, Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman. For years, many in the industry have anticipated this transaction and the benefits it would drive for customers, partners and employees. 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,” said Richard Baker, HBC executive chairman and CEO.

Saks Global is well positioned for growth in the luxury market following the recent transaction. The company will enhance the luxury shopping experience by investing in seamless access to a wide fashion assortment across all channels and advancing online functionality and fulfillment processes. Saks Global will also focus on personalised customer service, leveraging AI and first-party data to create individualised online shopping experiences and empower sales associates. Furthermore, the company will continue its commitment to promoting established and emerging designers through improved e-commerce and strategically located stores. Additionally, Saks Global will offer career development opportunities, creating value for its employees in the evolving luxury industry, the companies said in a joint media release.

“Saks has remained steadfast in our commitment to be at the forefront of luxury fashion, meeting customers not just where they are, but where they are going,” Metrick said. “We have respect and admiration for NMG and the contributions its teams have made in the company’s evolution. Together, with our ongoing focus on innovation, we are primed to drive growth for our brand partners and create career development opportunities for the incredible talent across Saks Global.”

Geoffroy van Raemdonck, chief executive officer of Neiman Marcus Group, said, “This announcement is a testament to our team's unwavering commitment to building rewarding customer relationships, driven by our differentiated business model. We believe this is a proactive choice in an evolving retail landscape that will create value for our customers and brand partners. Saks Fifth Avenue shares our passion for connecting customers with the world’s best luxury fashion. With our complementary capabilities and a new long-term capital structure, the combined group will position our iconic Neiman Marcus and Bergdorf Goodman brands for continued success.”

Saks Global will also include HBC’s US real estate assets and Neiman Marcus Group’s real estate assets, creating a $7 billion portfolio of well-located retail real estate assets in top-tier luxury shopping destinations. Ian Putnam, currently president and CEO of HBC Properties and Investments, will become CEO of Saks Global Properties and Investments, which will manage, maximise and enhance the company’s robust portfolio of assets. Both Metrick and Putnam will report to Baker, who will serve as executive chairman of Saks Global.

Upon closing of the transaction, HBC’s Canadian business will be recapitalised as a standalone entity, separate from Saks Global, with significantly reduced leverage and enhanced liquidity. HBC will continue to wholly own its Canadian retail and real estate assets, including Hudson’s Bay, which operates TheBay.com and the Hudson’s Bay network of stores, as well as a CAD$2 billion real estate portfolio. As a result, HBC’s Canadian business will be well positioned to support future growth, while continuing to serve its loyal Canadian customer base.

The boards of directors of HBC and Neiman Marcus Group have approved the transaction. 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.

The purchase price is expected to be funded by a combination of equity capital from new and existing shareholders and debt facilities. Amazon will be an investor in and work with Saks Global to innovate on behalf of customers and brands partners following the close of the transaction. Rhône Capital, a transatlantic middle-market private equity firm and affiliated investment entities, will continue as the active lead investor in Saks Global. Global software investor, Insight Partners, an investor in Saks.com, will be a shareholder in the new company. Salesforce will also become an investor at closing, the release added.

HBC has secured a $1.15 billion fully committed term loan financing from investment funds and accounts managed by affiliates of Apollo, and a $2 billion fully committed revolving asset-based loan facility from Bank of America (lead underwriter), Citigroup, Morgan Stanley, RBC Capital Markets, and Wells Fargo.

The transaction deleverages the combined enterprise while ensuring that Saks Global, on a pro forma basis, will have significant liquidity.

Fibre2Fashion News Desk (KD)