The Wall Street Journal, Saks Owner to Buy Neiman Marcus—With Help From Amazon. Retail rivals to combine in $2.65 billion deal to woo luxury shoppers.
The parent of Saks Fifth Avenue sealed a $2.65 billion deal to buy rival Neiman Marcus, according to people familiar with the matter, creating a powerhouse in luxury retailing that seeks to hang onto wealthy shoppers—all with a little help from Amazon.com AMZN -1.21%decrease; red down pointing triangle
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The boards of both companies have approved the transaction and an announcement could come as soon as this evening, the people said.
The department-store chains had been negotiating for months and had explored a combination several times over the years. Both have struggled as some consumers spent less on pricey goods and fashion brands opened their own flagship stores.
The combined company would have about $10 billion in annual sales, the people said. Luxury behemoth LVMH Moët Hennessy Louis Vuitton, which owns Louis Vuitton and dozens of other brands, had sales of about $94 billion last year.
Amazon would take a minority stake in the new company, which will be called Saks Global, and plans to provide it with technology and logistical expertise, the people said. Salesforce is another minority shareholder. Saks already does business with both tech companies, so the transaction would deepen existing partnerships, one of the people said.
HBC, a holding company that bought Saks in 2013, is financing the deal with $2 billion it raised from existing investors, the people said. They include Rhône Capital, the Abu Dhabi Investment Council and NRDC Equity Partners, a private-equity firm run by Richard Baker, HBC’s executive chairman, and his son Jack Baker. Affiliates of Apollo Global Management APO -0.20%decrease; red down pointing triangle are providing $1.15 billion in debt financing.
By Suzanne Kapner and Lauren Thomas
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1wI would wager that Saks and Neiman just prevented themselves from becoming totally irrelevant in the near future. Eventually, there will be an equilibrium between brick-and-mortar and ecommerce but we're not there yet. The details are not out yet but I would guess that Amazon locks in a major AWS / logistics customer and gets access to highly desirable branded / private label products, plus a deep pool of retail talent. Only major concern would be how high-end brands that sell through Neiman and Saks will react, but I believe that Amazon was making inroads on that front even before the deal. Don't forget that this is a small deal for Amazon that carries little risk and that it already owns Whole Foods, not the first time they have gone into brick-and-mortar retail and leveraged their scale, technology and logistics platform.