Posted on 05/04/2005 1:15:33 AM PDT by Paleo Conservative
Neiman Marcus Group said Monday that it agreed to be sold to the Texas Pacific Group and Warburg Pincus LLC for $5.1 billion.
Under the agreement, Texas Pacific and Warburg will buy all of the Neiman Marcus Class A and Class B shares for $100 per share in cash. Texas Pacific and Warburg will have equal stakes in the company. Texas Pacific has headquarters in Fort Worth and San Francisco, and its holdings include Burger King and J. Crew.
Neiman Marcus said its board approved the agreeement. Completion is subject to regulatory review and approval by Neiman Marcus Group shareholders and is expected to occur by Nov. 1, the companies said.
"We are very pleased with the results of our strategic review," said Richard Smith, chairman of the The Neiman Marcus Group. "This transaction provides outstanding shareholder value and represents an endorsement of the excellent performance of our entire team."
Burt Tansky, chief executive of Neiman Marcus Group, said, "We are excited to announce this transaction, particularly given the strengths of Texas Pacific Group and Warburg Pincus. They share our interest in the strong future of our company.
"Our customers, employees, and vendors should know that now, and following the completion of this transaction, it will be business as usual. We believe that our new partners will help us continue to focus on a business plan that is dedicated to luxury leadership, financial discipline, quality, and growth."
The Smith family, which owns a significant percentage of the equity of the Company, has entered into a separate agreement to vote its shares in favor of the merger.
Neiman, a luxury retail chain that has 37 stores across the nation, owns Bergdorf Goodman and fashion brands like Kate Spade.
The sale comes as a wave of mergers and acquisitions is reshaping the retailing industry. In February, Federated Department Stores, which owns Macy's and Bloomingdale's, agreed to buy May Department Stores, which owns Lord & Taylor and Marshall Field's, for $11 billion.
Late last year, Barneys was sold to Jones New York for $400 million. And last week, Saks, the parent of Saks Fifth Avenue, sold two of its regional chains, Proffitt's and McRae's, to a fellow retailer, Belk, for $622 million.
Speculation exists about dozens of other possible deals.
For at least three years, Neiman has represented the gold standard of the retailing industry, setting the pace for other luxury retailers. As chief executives at Saks Fifth Avenue came and went, Neiman Marcus' Tanksy kept extolling his stores.
For Texas Pacific and Warburg, the attraction to Neiman is its loyal customer base and demographic trends toward ever-higher incomes among the upper class.
The firms also hope to increase the number of Neiman stores around the country, opening them in places like Seattle, whose affluent population has never had a Neiman store, the executives said.
The firms may also consider expanding the number of Bergdorf Goodman stores, which inspired Bergdorf Blondes, the bestselling novel that chronicled the Upper East Side elite.
Bergdorf has only two stores in the country, a men's store and a women's store in Manhattan.
Even during weaker periods in the industry, the Neiman's shopper has remained amazingly faithful.
"She may buy less," Tanksy said in a recent interview, referring to the retailing weakness in the late 1990s, "but she never deserted us."
As some other department stores went downscale, trying to compete with burgeoning Kohl's and Target, Neiman jettisoned much of its more moderately priced merchandise and moved even more upscale.
"They embraced luxury goods not only in men's and women's apparel, but in jewelry and accessories as well," said Alexander Vreeland, a former executive at Giorgio Armani and now president of GAV, which designs and produces clothes for Calvin Klein. "Their Gucci, Prada and Armani franchises are enormous."
For Texas Pacific and Warburg, the test will be expanding the business without moving it downscale.
"The challenge is going to be to have significant growth and not dilute the unique cache of Neiman Marcus," Vreeland said.
Texas Pacific knows the retail game, most visibly through its acquisition of J. Crew. The retailer, which the company purchased about two years ago, was limping along until it hired Millard Drexler, who led the Gap through its glory years and has led its successful turnaround.
Texas Pacific also bought Petco and recently acquired Debenhams, a department-store chain in Britain.
Before the deal is completed, Neiman is expected to sell its private-label credit-card business, the executives said. That business, which has received offers from buyers like American Express and Citigroup, is expected to sell for more than $500 million.
The deal is being financed by Deutsche Bank and Credit Suisse First Boston. Goldman Sachs and J.P. Morgan advised Neiman.
This report contains material from the New York Times report that was included in Monday's print edition of the Star-Telegram.
Ping!
Read again the deal is being financed by Deutsche Bank and Credit Suisse. I don't believe either is based in Fort Worth.
Under the agreement, Texas Pacific and Warburg will buy all of the Neiman Marcus Class A and Class B shares for $100 per share in cash. Texas Pacific and Warburg will have equal stakes in the company. Texas Pacific has headquarters in Fort Worth and San Francisco, and its holdings include Burger King and J. Crew.......
The deal is being financed by Deutsche Bank and Credit Suisse First Boston. Goldman Sachs and J.P. Morgan advised Neiman.
Texas Pacific in Fort Worth is buying the company. Deutsche Bank and Credit Suisse are providing financing. The banks normally don't own something unless the borrower defaults.
I thought this would be about LeRoy Nieman, the barfbag artist.
They don't own the deal like your classic small town bank but it's their deal and they will leverage the deal to their advantage.
Texas Pacific and Warburg are just brown baggers for DB and CS. The money is from the EU and the lender controls the deal.
It's not a question of default.
It's a highly speculative leveraged buyout that DB and CS could sell to China tomorrow if they felt like it.
Texas does not own Neiman Marcus.
In fact I doubt that anyone knows who owns Neiman Marcus except the principle shareholders of DB and CS. Whoever they are.
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