Saks Fifth Avenue’s latest $3 billion bid to buy Neiman Marcus was rejected this week, people acquainted with the proposed marriage of the 2 luxury retail archrivals revealed.
Neiman is reportedly open to a take care of Saks — which has tried thrice to acquire its smaller but formidable competitor — however the two can’t seem to agree on the terms of a once-unthinkable merger, sources told The Wall Street Journal.
Saks’ offer valued Neiman — which owns Bergdorf Goodman in Latest York on top of its namesake high-end chain — at roughly $3 billion. Per Saks’ deal structure, a good portion of that sum wasn’t in money, which Dallas-based Neiman wasn’t comfortable about, according to The Journal.
The sum would mark a multibillion-dollar loss for Neiman, which in 2005 fetched $5.1 billion in the primary of a series of debt-fueled buyouts that ended up crippling the corporate.
This week’s rejection, nevertheless, is just the latest in Saks and Neiman’s on-again off-again talks a couple of merger, which date back greater than a decade and have largely fallen apart over disagreements over the value tag, sources told The Post earlier this 12 months.
The Journal reported that each retailers will proceed to mull a deal, though one likely won’t be reached before 2024.
The merger of Saks, which currently operates 41 stores, with Neiman’s 36 stores would almost actually face antitrust scrutiny. Insiders say the businesses would likely argue that their dominance in luxury has sharply eroded over the past decade with the rise of the web.
As The Post exclusively reported in June, Neiman’s current private equity owners have squabbled over a possible exit. Neiman’s two minority investors — Davidson Kempner Capital Management and Sixth Street Partners — have been pushing for a direct sale.
However the 116-year-old company’s majority investor — Pacific Investment Management Co., higher often known as PIMCO — had been willing to hold on longer, arguing that the business will improve, sources confirmed on the time.
By August, Neiman’s persistently disappointing results appeared to have finally swayed PIMCO to weigh a possible sale to 156-year-old Saks’ Toronto-based owner, Hudson’s Bay, which executed exclusive due diligence to evaluate Neiman’s business, sources with knowledge of the negotiations told The Post this summer.
Hudson’s Bay likely took Neiman’s inability to shoulder losses from the coronavirus pandemic into consideration. The chain declared bankruptcy in May 2020, blaming the pandemic for spoiling its turnaround and forcing it right into a restructuring.
Neiman said it emerged from its high-profile collapse just 4 months after announcing its Chapter 11 bankruptcy protection process thanks to a restructuring plan that eliminated greater than $4 billion of debt and $200 million of annual interest expense.
The luxurious department store concurrently announced that it was shaking up its board, and named former LVMH and eBay executives as directors, though CEO Geoffroy van Raemdonck would remain in the highest job.
Neiman drew criticism over keeping van Raemdonck in his cushy position as he was known to take lavish pay packages for himself, whilst the corporate he ran lost money, laid off employees and slashed pensions.
In 2020 — the 12 months of Neiman’s bankruptcy — he walked away with a $1.5 million yearly salary, not to mention greater than $2 million in stock options and a payment of $172,135 to offset taxes.
Including his $4 million bonus, van Raemdonck reportedly walked away with a pay package that topped $6 million in 2020.
Within the 12 months leading up to Neiman’s bankruptcy filing, van Raemdonck received three pay raises that saw his annual salary jump from $1 million to $1.2 million and eventually to $1.5 million by early March 2019. Together with each bi-weekly paycheck, the chief also received a $19,230 bonus check, according to court documents.
Representatives for Saks Fifth Avenue at Hudson’s Bay and for Neiman Marcus declined to comment.