Advanced Search

Two Investment Groups Buy Neiman Marcus for $6B

Sep 9, 2013 4:50 PM   By Jeff Miller
Comment Comment Email Email Print Print Facebook Facebook Twitter Twitter Share Share

RAPAPORT... TPG and Warburg Pincus agreed to sell luxury retailer Neiman Marcus to an investment group led by Ares Management LLC and the Canada Pension Plan Investment Board in a deal worth $6 billion. A portion of the purchase price will be used at the closing to repay outstanding credit facilities, other than its debentures. Ares and Canada Pension Plan  will hold an equal  interest in the luxury retailer and current investors will retain a minority stake. The transaction is expected to close in the fourth quarter of 2013, subject to regulatory approvals and other customary closing conditions.

Neiman Marcus operates 41 stores in the U.S. as well as two Bergdorf Goodman locations and 36 Last Call outlets. Neiman Marcus no longer reports monthly sales figures, but for the most recent quarter that ended on April 27, revenue rose 3.7 percent year on year to $1.1 billion and same-store sales increased 3.6 percent. Operating earnings increased 2.5 percent to $150.3 million and profit rose 13 percent to $70.8 million.

On June 24, Neiman Marcus filed  regulatory plans to launch an initial public offering (IPO) for as much as $100 million in stock, which is a standard filing figure, but word on the street had been that its owners were hoping to sell the retailer outright.  TPG and Warburg acquired Neiman Marcus in early October 2005 for $5.1 billion and took the luxury retailer private at that time.

“We are delighted to join with Canada Pension Plan as a long-term investor in Neiman Marcus Group, a leading luxury retailer with global brand recognition that attracts shoppers from all over the world. We share a common vision with the company’s management team, led by its highly respected chief executive officer, Karen Katz, and together, we plan on investing meaningful capital into the business to ensure Neiman’s long-term position as the unparalleled leader in luxury retail,” said David Kaplan, a senior partner and co-head of Ares. “This investment fits with our longstanding approach of accelerating growth in companies in the consumer and retail sectors. As a result of this philosophy, we believe we have achieved superior growth with many consumer-facing businesses, including Floor & Decor, General Nutrition Centers, House of Blues, Maidenform Brands, Samsonite, Serta, Simmons, Smart & Final and 99¢ Only Stores.”

André Bourbonnais, a senior vice president at Canada Pension Plan, said, “This is an excellent opportunity to invest in a leading omni-channel luxury retailer operating two of the most iconic retail brands in the U.S. We believe the company’s strong market position, combined with an expected increase in U.S. luxury goods spending, provide attractive opportunities for future growth. We are excited to partner once again with Ares, a like-minded, long-term partner of ours.”

Credit Suisse acted as financial advisor to Neiman Marcus Group, and RBC Capital Markets and Deutsche Bank Securities Inc. acted as financial advisors to Ares and Canada Pension Plan, all of which provided committed debt financing in connection with the transaction. Cleary Gottlieb Steen & Hamilton LLP acted as legal counsel to Neiman Marcus Group. Proskauer Rose LLP acted as transaction counsel and Latham & Watkins LLP acted as finance counsel to Ares and CPPIB. Torys LLP acted as counsel to CPPIB.

Neiman Marcus Group’s currently outstanding 7.125 percent senior debentures due in 2028 issued by its operating subsidiary, The Neiman Marcus Group Inc., are expected to remain outstanding immediately following the closing of the transaction.

Comment Comment Email Email Print Print Facebook Facebook Twitter Twitter Share Share
Tags: ares management, Canada pension plan, investors, Jeff Miller, luxury, Neiman Marcus, retail
Similar Articles
Comments: (0)  Add comment Add Comment
Arrange Comments Last to First
© Copyright 1978-2021 by Rapaport USA Inc. All rights reserved. Index®, RapNet®, Rapaport®, PriceGrid™, Diamonds.Net™, and JNS®; are registered TradeMarks.
While the information presented is from sources we believe reliable, we do not guarantee the accuracy or validity of any information presented by Rapaport or the views expressed by users of our internet service.