Saks Fifth Avenue and Neiman Marcus have reportedly agreed to a major merger that would combine the nation’s two largest luxury retailers, with Amazon also participating in the deal.
Saks parent HBC, which The Washington Post first reported last summer that it was in merger talks with its longtime partner, is buying Neiman Marcus for $2.65 billion, sources said. It’s a once-unthinkable deal that comes as both chains have struggled with years of sluggish luxury spending.
In a surprising development, Seattle-based Amazon, the online retail giant led by billionaire Jeff Bezos, will not only take a minority stake in the new company, to be called Saks Global, but will also provide “technology and logistics services” to the combined business, people familiar with the matter told The Washington Post.
The deal gives Amazon unprecedented access to the luxury market, a thorny area where the company has tried for more than a decade to gain a foothold but largely failed.
Salesforce, the business software giant led by Silicon Valley tycoon Marc Benioff, is also set to become an investor in Saks Global, according to sources.
Just two months before the Saks acquisition, private equity firm Ares Management and the Canada Pension Plan Investment Board acquired Neiman Marcus for $6 billion.
Amazon already provides cloud services and call-center technology to Saks, while Salesforce provides technology services.
The deal will be funded with $1.15 billion in long-term debt from Apollo Global Management L.P. and a $2 billion revolving asset-backed loan from multiple banks including Bank of America and Morgan Stanley, as well as investments from Amazon and Salesforce, according to people familiar with the deal.
HBC, led by Richard Baker, also raised more than $2 billion in capital, leaving the combined business with less total debt and ample liquidity to further invest in inventory and grow.
Saks Global will be led by Saks CEO Mark Metrick.
It’s unclear what role Neiman Marcus CEO Jeffrey van Raemdonck will play.
If the merger goes through, the Belgian-born executive would stand to receive a huge salary, according to people familiar with the matter, but this is a sore point for some rank-and-file employees who accuse Van Raemdonck of trying to profit at their expense.
Van Raemdonck led Neiman through bankruptcy in 2020 during his six-year tenure, which was marked by near 100% turnover among the company’s senior leadership.
Dallas-based Neiman Marcus gained new private equity owners after emerging from Chapter 11 bankruptcy in 2020, including Pacific Investment Management, Davidson Kempner Capital Management and Sixth Street Partners.
In May, Neiman Marcus cut dozens of jobs at its headquarters and stores, according to LinkedIn posts about the layoffs and employees working at the company.
The deal is pending regulatory approval, which experts say could take up to nine months, and is risky given the lawsuit the Federal Trade Commission filed in April to block Tapestry’s $8.5 billion acquisition of Capri Holdings, which owns the Michael Kors brand.
Neiman and Saks operate about 175 stores, including Neiman Marcus’ flagship Bergdorf Goodman in New York City, and the companies own more than a third of the store real estate, according to people familiar with the matter.
