Saks Fifth Avenue's Parent Company HBC to Acquire Neiman Marcus for $2.65 Billion

By Madz Dizon

Jul 04, 2024 06:19 PM EDT

Saks Fifth Avenue's Parent Company HBC to Acquire Neiman Marcus for $2.65 Billion — A closed sign hangs in the window of a Neiman Marcus store that has been shuttered by the COVID-19 pandemic on May 07, 2020 in Chicago, Illinois.
(Photo : Scott Olson/Getty Images)

The parent company of Saks Fifth Avenue has recently announced its acquisition of Neiman Marcus Group, a prominent upscale rival.

The deal, valued at $2.65 billion, includes the ownership of Neiman Marcus and Bergdorf Goodman stores. Notably, online giant Amazon will also hold a minority stake in this venture, according to AP News.

HBC Expands Luxury Portfolio with Neiman Marcus Acquisition

A new entity, Saks Global, is set to emerge as a dominant force in the luxury market. This comes at a time when the industry has become more diverse, with various players ranging from online marketplaces selling luxury goods to high-end fashion and accessories brands establishing their own retail outlets.

A new organization will be formed, bringing together the Saks Fifth Avenue and Saks OFF 5TH brands, Neiman Marcus and Bergdorf Goodman, along with the real estate assets of Neiman Marcus Group and HBC, a holding company that acquired Saks in 2013. The stores will maintain their individual brand identities.

HBC has successfully secured $1.15 billion in financing from investment funds and accounts managed by affiliates of Apollo, along with a $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.

Amazon's Stake Signals New Era in Luxury Retail Partnerships

The deal was finally announced on Thursday, July 4, following nearly a year of negotiations between the two department store chains. However, the interesting aspect of Amazon's minority stake adds an unexpected element to what was otherwise a predictable agreement, as noted by Neil Saunders, the managing director of GlobalData, a research firm.

Amazon has partnered with Saks Global to provide their extensive knowledge in logistics and personalization technology. Salesforce, a prominent player in the cloud-based software industry, will also be joining as an investor when the deal is finalized.

The CEO of Neiman Marcus Group, Geoffroy van Raemdonck, expressed his enthusiasm for the deal, highlighting the dedication of his team in cultivating valuable customer relationships through their unique business approach.

The agreement occurs during a challenging period for well-established department stores. In February, Macy's announced plans to close 150 of its stores over the next three years due to a decline in sales. The company aims to shift its focus towards expanding its luxury brand offerings, The Hill reported.