Posted on 07/03/24
| News Source: WSJ
The parent of Saks Fifth Avenue sealed a $2.65 billion deal to buy rival Neiman Marcus, according to people familiar with the matter, creating a powerhouse in luxury retailing that seeks to hang onto wealthy shoppers—all with a little help from Amazon.com AMZN -1.21%decrease; red down pointing triangle.
The boards of both companies have approved the transaction and an announcement could come as soon as this evening, the people said.
The department-store chains had been negotiating for months and had explored a combination several times over the years. Both have struggled as some consumers spent less on pricey goods and fashion brands opened their own flagship stores.
The combined company would have about $10 billion in annual sales, the people said. Luxury behemoth LVMH Moët Hennessy Louis Vuitton, which owns Chanel, Louis Vuitton and dozens of other brands, had sales of about $94 billion last year.
Amazon would take a minority stake in the new company, which will be called Saks Global, and plans to provide it with technology and logistical expertise, the people said. Salesforce is another minority shareholder and would assist with the adoption of artificial intelligence. Saks already does business with both tech companies, so the transaction would deepen existing partnerships, one of the people said.
HBC, a holding company that bought Saks in 2013, is financing the deal with $2 billion it raised from existing investors, the people said. They include Rhône Capital, the Abu Dhabi Investment Council and NRDC Equity Partners, a private-equity firm run by Richard Baker, HBC’s executive chairman, and his son Jack Baker. Affiliates of Apollo Global Management APO -0.20%decrease; red down pointing triangle are providing $1.15 billion in debt financing.