Saks Fifth Avenue’s latest $3 billion bid to buy Neiman Marcus was rejected this week, people familiar with the marriage proposal of the two luxury retail archrivals revealed.
Neiman is reportedly open to a deal with Saks, which has tried three times to acquire its smaller but formidable competitor, but the two can’t seem to agree on the terms of a once-unthinkable merger, sources said. The Wall Street Journal.
Saks’ offer valued Neiman, which owns Bergdorf Goodman in New York as well as the high-end chain of the same name, at about $3 billion. Under the structure of the Saks deal, a significant portion of that sum was non-cash, which Dallas-based Neiman didn’t like, according to The Journal.
The sum would mark a multibillion-dollar loss for Neiman, which netted $5.1 billion in 2005 in the first of a series of debt-fueled buyouts that ended up crippling the company.
This week’s rejection, however, is just the latest in Saks and Neiman’s on-again, off-again merger talks, which date back more than a decade and have largely fallen apart over disagreements over price, sources told The Post previously. year.
The Journal reported that both retailers will continue to consider a deal, although it likely won’t be reached before 2024.
Merging Saks, which currently operates 41 stores, with Neiman’s 36 stores would almost certainly face antitrust scrutiny. Experts say the companies would likely argue that their dominance in the luxury sector has eroded dramatically over the past decade with the rise of the Internet.
As The Post exclusively reported in June, Neiman’s current private equity owners have quarreled over a possible exit. Neiman’s two minority investors, Davidson Kempner Capital Management and Sixth Street Partners, have been pushing for an immediate sale.
But the majority investor in the 116-year-old company, Pacific Investment Management Co., better known as PIMCO, had been willing to hold out longer, arguing that business will improve, sources confirmed at the time.
In August, Neiman’s persistently disappointing results appeared to finally have influenced PIMCO to weigh a possible sale to 156-year-old Toronto-based Saks owner Hudson’s Bay, which ran exclusive due diligence to evaluate Neiman’s business. , sources with knowledge of the negotiations. he told The Post this summer.
Hudson’s Bay likely took into account Neiman’s inability to shoulder losses from the coronavirus pandemic. The chain filed for bankruptcy in May 2020, blaming the pandemic for derailing its recovery and forcing it into a restructuring.
Neiman said it emerged from its notorious collapse just four months after announcing its Chapter 11 bankruptcy protection process thanks to a restructuring plan that eliminated more than $4 billion in debt and $200 million in annual interest expenses. .
At the same time, the luxury department store announced it would reorganize its board of directors and appointed former LVMH and eBay executives as directors, although CEO Geoffroy van Raemdonck would remain in the top job.
Neiman drew criticism for keeping Van Raemdonck in his comfortable position, as he was known for receiving generous pay packages even as the company he ran lost money, laid off employees and cut pensions.
In 2020, the year of Neiman’s bankruptcy, he pocketed an annual salary of $1.5 million, not to mention more than $2 million in stock options and a $172,135 tax offset payment.
Including his $4 million bonus, van Raemdonck reportedly took home a salary package that exceeded $6 million in 2020.
In the year before Neiman filed for bankruptcy, van Raemdonck received three pay raises that saw his annual salary rise from $1 million to $1.2 million and finally to $1.5 million in early March 2019. Along with each biweekly paycheck, the executive also received a bonus check for $19,230, according to court documents.
Representatives for Saks Fifth Avenue in Hudson Bay and Neiman Marcus declined to comment.
