(Reuters) – Saks Fifth Avenue parent HBC will acquire department store chain Neiman Marcus in a $2.65 billion deal, the companies said on Thursday, giving them greater negotiating power with suppliers and a better ability to control costs.
The deal comes as luxury retailers struggle with slowing demand as high interest rates and inflation force customers to limit their budgets, following a post-pandemic boom in luxury retail.
HBC said it will establish Saks Global, a combined entity of Saks Fifth Avenue, Neiman Marcus and other luxury real estate and retail assets.
Neiman filed for bankruptcy in 2020 after the pandemic forced the closure of Neiman's and other stores across the United States, crushing the company's revenue.
Neiman Marcus is known for selling designer dresses, shoes, handbags and other luxury goods, targeting wealthy customers.
Reuters reported on Wednesday that HBC has agreed to buy Neiman Marcus.
Marc Metrick, CEO of Saks' e-commerce business, will lead the combined company.
Saks Global, as a combined entity, will compete with Nordstrom (NYSE:), Bloomingdale's and Macy's (NYSE:), which is reportedly in talks to sell itself to Arkhouse Management and Brigade Capital Management for approximately $6.9 billion.
HBC and Neiman said online retailer amazon.com (NASDAQ:) and customer relationship management software provider Salesforce (NYSE:) will also be investors in Saks Global, providing technology, logistics and assistance with artificial intelligence integration.
HBC's existing investor, Rhone Capital, a private equity firm, will be the lead investor in Saks Global.
HBC is financing the deal with funds raised from new and existing shareholders and debt. Private equity firm Apollo Global Management (NYSE:) is providing $1.15 billion in debt financing.
The Saks owner has also secured $2 billion in debt financing from a syndicate of Wall Street banks.
JPMorgan and Lazard (NYSE:) acted as financial advisors to Neiman Marcus Group on the deal.
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