That’s the rumor that Bloomberg News and the Wall Street Journal have cited: “people with knowledge of the matter” reportedly say that KKR & Co., the private equity firm with some $78 billion in assets (Toys “R” Us Inc., Dollar General Corp.) is contemplating investing in Saks Inc. and seeking a merger with Neiman Marcus Group,too.
Such a deal would create an upscale department store chain with more than $7 billion in sales annually, could cut costs and give the retailers powerful leverage in dealing with major luxury brands and designers.
The idea of merging the two luxury powerhouses surfaced several years ago but never materialized. However, some of the same advantages that initially lead to that speculation remain.
Many of the advantages might be more on the back end, such as with distribution centers, e-commerce, since both Neiman Marcus and Saks Fifth Avenue have strong and enduring reputations each in its own right. Mortimer Singer, president of Marvin Traub Associates, told Bloomberg that it would be unlikely the two retailers would combine under a single name. “They are both such wonderful brands. They are very iconic nameplates.”
Both retailers have recently been exploring strategic alternatives, however. Saks hired Goldman Sachs Group for advice on what to do. Speculation that the company is seeking a sale has caused its shares to increase by a third this month.
Meanwhile, TPG Capital and Warburg Pincus LLC, which took Neiman Marcus private in 2005, reportedly hired Credit Suisse Group to explore an initial public offering or sale of the company for an estimated $8 billion.