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Parent company of Saks to acquire Neiman Marcus in blockbuster deal

Neiman Marcus
Neiman Marcus operates 36 luxury department stores.

HBC, the Canadian parent company of Saks Fifth Avenue and Hudson’s Bay, is adding another legendary retailer to its portfolio.

In a move that would create a luxury powerhouse, HBC has entered into a $2.65 billion agreement to buy Dallas-based retailer Neiman Marcus Group in a deal valued at $2.65 billion. Amazon is among the investors in the deal. (See transaction details at end of article.)

Neiman Marcus operates 36 department stores, two Bergdorf Goodman stores and five Last Call off-price outlets.  There are 39 Saks Fifth Avenue stores and 95 Saks Off 5th locations, as well as well as online business.

The combined company, to be called Saks Global, will include the Saks Fifth Avenue, Saks Off 5th Neiman Marcus and Bergdorf Goodman brands, each of which will continue operations under their own brand names. It will be led by Marc Metrick, the CEO of 

"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,” Metrick said. “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.”

READ MORE: Saks Fifth Avenue stores, online site become separate companies

Neiman Marcus CEO Geoffroy van Raemdonck called the deal a testament to "our team's unwavering commitment to building rewarding customer relationships, driven by our differentiated business model."

"Saks Fifth Avenue shares our passion for connecting customers with the world’s best luxury fashion," he said. "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.”

Saks Global will also include HBC’s U.S. real estate assets and Neiman Marcus Group’s real estate assets, creating a $7 billion portfolio of well-located 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. Both Metrick and Putnam will report to HBC executive chairman and CEO Richard Baker, who will serve as executive chairman of Saks Global.

The deal is subject to approval by the Federal Trade Commission. In April, the agency sued to block Tapestry Inc.’s acquisition of Capri Holdings, whose portfolio includes Michael Kors, Versace and Jimmy Choo. Tapestry is the parent company of Coach, Kate Spade and Stuart Weitzman.

The combined company would have only two real competitors in the high-end U.S. department store market: Bloomingdale's, which is owned by Macy's Inc., and Nordstrom. 

Reports of a possible Saks and Neiman’s merger have circulated for years. But the latest negotiations picked up heat about a year ago, with two companies engaged in serious discussions for months.

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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 and affiliated investment entities, will continue as the active lead investor in Saks Global. 

Global software investor, Insight Partners, an investor in, will be a shareholder in the new company. Salesforce will also become an investor at closing.

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

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 and the Hudson’s Bay network of stores, as well as a CAD$2 billion real estate portfolio.

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