The owners of the Neiman Marcus luxury retail chain agreed on Monday to sell it to a group led by Ares Management and a Canadian pension plan in a deal worth $6 billion.
The owners, a group of private equity investors led by TPG and Warburg Pincus, had been searching for a buyer for Neiman ahead of a planned initial public offering later in the year. If they had not found a buyer willing to pay the desired $6 billion, they were prepared to go ahead with the public offering, people briefed on the deal said.
The deal marks the latest transaction in the luxury department store sector. Earlier this year, Hudson Bay, the largest Canadian department store, paid $2.4 billion for Saks, a competitor to Neiman.
Neiman Marcus operates 79 stores across the country, including two Bergdorf Goodman stores in Manhattan, and the Last Call outlet stores. Sales have rebounded in recent years. The company reported $4.3 billion in revenue last year, compared with $3.6 billion in 2009.
“I have great confidence that our customers, associates and vendor partners will share my enthusiasm that our new investors will help us pursue a business dedicated to luxury and fashion, attentive service and innovative marketing,†Karen Katz, the chief executive of Neiman, said in a statement.
Ares, one of Neiman’s new owners, has experience in the consumer sector, with previous investments in General Nutrition Centers, House of Blues and the mattress companies Serta and Simmons. The asset manager, based in Los Angeles, has about $66 billion under management.
“We plan on investing meaningful capital into the business to ensure Neiman’s long-term position as the unparalleled leader in luxury retail,†David Kaplan, co-head of private equity at Ares, said in a statement.
Ares and the Canada Pension Plan Investment Board will hold equal stakes in the company, with Neiman Marcus management retaining a minority stake. The buyers said they expect the deal to close in the fourth quarter.
For TPG and Warburg Pincus, which paid about $5.1 billion for Neiman in 2005, the sale marks a successful exit, especially as spending on luxury goods has faltered in the wake of the recession.
Credit Suisse advised Neiman, and Cleary Gottlieb Steen & Hamilton provided the company with legal advice. RBC Capital Markets and Deutsche Bank advised Ares and the Canada Pension Plan, with Proskauer Rose and Latham & Watkins providing legal advise. All three banks are providing financing for the deal. The law firm Toyrs also provided legal advice to the Canada Pension Plan.
