Saks Fifth Avenue parent company to acquire Neiman Marcus Group for US$2.65B

05 Jul 2024 --- Hudson’s Bay Company (HBC), parent company of Saks Fifth Avenue, enters a definitive agreement to acquire Neiman Marcus Group, parent company of Neiman Marcus and Bergdorf Goodman, for a total value of US$2.65 billion.

Upon transaction close, HBC will establish Saks Global, a combination of luxury retail and real estate assets, including Saks Fifth Avenue, Saks OFF 5TH, Neiman Marcus and Bergdorf Goodman. Each brand will continue operations under their respective brands.

“We’re thrilled to take this step in bringing together these iconic luxury names, Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman,” says Richard Baker, HBC executive chairman and CEO.

“For years, many in the industry have anticipated this transaction and the benefits it would drive for customers, partners and employees.”

Expanding access to merchandise
Saks Global aims to drive further enhancements in online functionality and fulfillment processes while providing greater access to merchandise.

With personalized experiences fundamental to luxury shopping, Saks Global will bolster its technology-driven approach to personalization, leveraging first-party data and AI to create “individualized online shopping experiences” and “empower sales associates to better serve customers.”

“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,” says Baker.

Current Saks 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.

“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,” says Metrick. “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, CEO of Neiman Marcus Group, comments: “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.”

Portfolio and management
Upon closing of the transaction, Saks Global will comprise the Saks Fifth Avenue, Saks Off 5TH, Neiman Marcus and Bergdorf Goodman brands, which will continue operations under their respective brand names.

Saks Global will also include HBC’s US real estate assets and Neiman Marcus Group’s real estate assets, creating a US$7 billion portfolio of retail real estate assets in 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, maximize 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 recapitalized 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 (US$1.5 billion) real estate portfolio.

Transaction details
The boards of directors of HBC and Neiman Marcus Group have approved the transaction. It 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 with 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.

HBC has secured US$1.15 billion in fully committed term loan financing from investment funds and accounts managed by Apollo affiliates, and a US$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.