Private Investors to Buy Neiman Marcus for $6 Billion

In Reports, What's New, Industry News by Jeff Prine

Neiman MarcusDallas—For a second time this year, a Canadian company is buying a leading U.S. luxury retailer. The Canadian Pension Plan Investment Board and Ares Management LLC, a private equity firm, announced they intend to buy Neiman Marcus Inc. for $6 billion.

In July, Hudson’s Bay Company, which owns Lord & Taylor, bought Saks Inc. for $2.4 billion in cash—basically a month after a rumor surfaced that Neiman Marcus had considered a merger with Saks.

News of the purchase came on the heels of Neiman Marcus’ plans in June to raise $100 million from an initial public offering of its stock.

However, this transaction, which is expected to close in fourth quarter, gives a handsome return to TPG Capital and Warburg Pincus, Neiman’s current owners, who paid $5.1 billion to buy the company in 2005. Some of the sales proceeds will be used to pay off outstanding debt with current credit facilities.

Plans to Invest ‘Meaningful Capital’

According to a statement, the retailer, and the company’s management, including CEO Karen Katz, will retain a minority stake.

“I have great confidence that our customers, associates and vendor partners will share my enthusiasm that our new investors will help us pursue a business dedicated to luxury and fashion, attentive service and innovative marketing,” Katz said in a statement.

Ares and the Pension Fund will hold equal interest in Neiman Marcus.

“This investment fits with our longstanding approach of accelerating growth in companies in the consumer and retail sectors,” said David Kaplan, senior partner of Ares, which already holds diverse investments including Floor & Decor, General Nutrition Centers, House of Blues, Maidenform Brands, Samsonite, Serta, Simmons, Smart & Final and 99¢ Only Stores. “We plan on investing meaningful capital into the business to ensure Neiman’s long-term position as the unparalleled leader in luxury retail.”

Jim Skinner, chief operating officer at Neiman’s, told the Dallas News that the two new owners conducted extension due diligence, speaking to both management and employees at several stores.

“It was an impressive amount of effort in a short time they spent getting to know the stores and the industry,” Skinner said. “We feel that we have found some great new owners,” Skinner said. “They are very supportive of our strategy and we’re looking forward to some fresh eyes.”


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