(Reuters) – Saks Fifth Avenue parent HBC will acquire department store chain Neiman Marcus in a $2.65 billion deal, the companies said on Thursday, giving them stronger bargaining power with suppliers and a greater ability to control costs.
The deal comes as luxury retailers face declining demand as high interest rates and inflation force customers to tighten their budgets following a post-pandemic luxury retail boom.
HBC said it will create Saks Global, a combined entity of Saks Fifth Avenue, Neiman Marcus and other luxury retail and real estate assets.
Neiman filed for bankruptcy protection in 2020 after the pandemic forced the closure of Neiman and other stores in the United States, crushing the company’s revenue.
Neiman Marcus is known for selling designer dresses, shoes, handbags and other luxury products aimed at wealthy customers.
Reuters had reported on Wednesday that HBC agreed to buy Neiman Marcus.
Marc Metrick, CEO of e-commerce company Saks, will lead the combined company.
As a combined entity, Saks Global will compete with Nordstrom (NYSE:), Bloomingdale’s and Macy’s (NYSE:), which is reportedly in talks to sell itself to Arkhouse Management and Brigade Capital Management for approximately $6.9 billion.
HBC and Neiman say online retailer Amazon.com (NASDAQ:) and customer relationship management software provider Salesforce (NYSE:) will also be investors in Saks Global, providing technology, logistics and assistance with artificial intelligence integration.
Existing HBC investor Rhone Capital, a private equity firm, will be the lead investor in Saks Global.
HBC is financing the deal with money from new and existing shareholders and debt. Private equity firm Apollo Global Management (NYSE:) is providing $1.15 billion in debt financing.
The Saks owner has also secured $2 billion in debt financing from a syndicate of Wall Street banks.
JPMorgan and Lazard (NYSE 🙂 served as financial advisors to Neiman Marcus Group on the deal.
