Neiman Marcus to be bought by private investors for $6 BILLION
Neiman Marcus to be bought by private investors for $6 billion
David Woo/Staff Photographer
Neiman Marcus' flagship store in downtown Dallas and others in the chain have seen the return of the luxury customer as the economy has improved.
By Maria Halkias
Maria Halkias The Dallas Morning News Staff Writer
Published: 09 September 2013 10:32 AM
Updated: 09 September 2013 11:29 AM
It’s a done deal.
The Canada Pension Plan Investment Board and private equity firm Ares Management LLC have acquired Dallas-based Neiman Marcus for $6 billion.
TPG and Warburg Pincus have owned Neiman Marcus since 2005 as part of a $5.1 billion leveraged buyout.
Ares and the pension fund will hold an equal economic interest in the retailer, and the company’s management, including CEO Karen Katz, will retain a minority stake. The transaction is expected to close in the fourth quarter.
“This investment fits with our longstanding approach of accelerating growth in companies in the consumer and retail sectors,” said David Kaplan, senior partner and co-head of Ares. Its other retail and consumer investments include Floor & Decor, General Nutrition Centers, House of Blues, Maidenform Brands, Samsonite, Serta, Simmons, Smart & Final and 99˘ Only Stores.
As the company was preparing for an IPO it also solicited potential buyers for a private sale.
Neiman Marcus chief operating officer Jim Skinner said in an interview that the new owners did extensive due diligence, talking to management, employees and visiting several stores.
“It was an impressive amount of effort in a short time they spent getting to know the stores and the industry,” Skinner said this morning.
“We feel that we have found some great new owners,” Skinner said. “They are very supportive of our strategy and we’re looking forward to some fresh eyes.”
A portion of the purchase price will be used at the closing to repay about $3 billion in debt under the company’s existing credit facilities other than $125 million in publicly traded notes.
Between now and closing, a new capital structure with new debt will be ironed out, Skinner said. “There’s still a lot of work to do.”
While the company won’t be debt free, it wouldn’t have been either if it issued stock to the public. Those funds would have gone to TPG and Warburg Pincus. After eight years of being owned by private equity firms, Neiman Marcus is used to operating with a reasonable level of debt, Skinner said.
There are no plans yet for a Canadian store. But several years ago, Canada was Neiman Marcus’ first country outside the U.S. for its ecommerce business.
Neiman Marcus Group operates 79 stores in more than 6.5 million gross square feet. It has 41 Neiman Marcus Stores, two Bergdorf Goodman locations in Manhattan and 36 Last Call outlet centers. Its upscale online retailing division operates under the Neiman Marcus, Bergdorf Goodman, Last Call and Horchow brand names.
http://www.dallasnews.com/business/retail/20130909-neiman-marcus-to-be-bought-by-private-investors-for-6-billion.ece
