Parent company of Saks Fifth Avenue to buy Neiman Marcus for US$2.65 billion

NEW YORK (AP):

The parent company of Saks Fifth Avenue has signed a deal to buy upscale rival Neiman Marcus Group, which owns Neiman Marcus and Bergdorf Goodman stores, for US$2.65 billion, with online behemoth Amazon holding a minority stake.

The new entity will be called Saks Global, creating a luxury powerhouse at a time when the arena has become increasingly fragmented with different players, from online marketplaces that sell luxury goods to upscale fashion and accessories brands opening up their own stores.

The new organisation will comprise the Saks Fifth Avenue and Saks OFF 5TH brands, Neiman Marcus and Bergdorf Goodman, as well as the real estate assets of Neiman Marcus Group and HBC, a holding company that purchased Saks in 2013.

The stores will continue to operate under their own brand names.

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

The deal was announced Thursday after the two department store chains had been in negotiations for about a year. But the twist is Amazon’s minority stake, which adds “a bit of spice” to an otherwise anticipated pact, according to Neil Saunders, managing director of GlobalData, a research firm. Amazon will be working with Saks Global to offer its expertise in logistics and personalisation technology. Salesforce, a cloud-based software powerhouse, will also become an investor at closing.

The Wall Street Journal first reported the impending deal Wednesday.