Ares Management LLC and the Canada Pension Plan Investment Board confirmed they have agreed to acquire Neiman Marcus Inc. for $6 billion, a move that shifts the luxury retailer from one set of private-equity ownership to another.
The Wall Street Journal on Sunday had reported that a deal was close, citing people familiar with the matter.
The deal is expected to close in the fourth quarter. Neiman noted part of the purchase price will be used to pay down debt. Ares and CPPIB will hold equal stakes in the retailer, while Neiman's management will keep a minority stake.
Neiman, purchased by private-equity firms TPG and Warburg Pincus LLC for $4.9 billion in 2005, had been looking for an outright buyer for the retail chain while simultaneously laying the groundwork for an initial public offering of stock. The retailer's owners also include private-equity firm Leonard Green & Partners LP.
In a prepared statement, Ares's co-head of private equity, David Kaplan, said the investment in Neiman fits with the firm's approach of accelerating growth in companies in the consumer and retail sectors.
Meanwhile, Andre Bourbonnais, senior vice president of private investments at CPPIB, said Neiman's "strong market position, combined with an expected increase in U.S. luxury goods spending, provide attractive opportunities for future growth."
Neiman is a century-old, luxury department-store chain based in Dallas, specializing in items like $400 Jimmy Choo pumps, $2,000 Prada leather bags and $750 Burberry trench coats. It is also known for its outlandish holiday catalogs.
Besides its Neiman Marcus department stores, the company has outlet stores and owns high-end retailer Bergdorf Goodman as well as a home-furnishings catalog and an e-commerce site. Neiman operates a total of about 75 stores, including 41 Neiman Marcus locations in the U.S., according to the company's website.
In recent years, Neiman Chief Executive Karen Katz has pushed the retailer to broaden its assortment of goods to attract younger and less-affluent shoppers.
Neiman reported $4.5 billion in sales for the 12 months ended in April, slightly below Neiman's pre-crisis revenue level of $4.6 billion in 2008. Even so, some outside observers have said that a price around $6 billion would be fair for Neiman, and value the company at a multiple to certain earnings measures comparable with what rival Saks[3] Inc. commanded in a recently announced sale to Hudson's Bay Co.
Hudson's Bay in July agreed to pay $2.4 billion, or $16 a share, to acquire Saks in an all-cash deal. As of the end of its most recent quarter, Saks operated 42 Saks Fifth Avenue stores and 66 outlet stores.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com[4] and Mike Spector at mike.spector@wsj.com[5]
References
- ^ MIKE SPECTOR (topics.wsj.com)
- ^ CONNECT (online.wsj.com)
- ^ Saks (online.wsj.com)
- ^ saabira.chaudhuri@wsj.com (online.wsj.com)
- ^ mike.spector@wsj.com (online.wsj.com)
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