Neiman Marcus Rejects Saks 5th Ave Latest Purchase Offer

By: Don Driggers

Saks Fifth Avenue’s recent bid of $3 billion to acquire Neiman Marcus faced rejection this week, marking the latest episode in the ongoing saga of discussions between the two luxury retail giants. Despite Saks making its third attempt to acquire Neiman Marcus, the companies remain at an impasse over the terms of the proposed merger, according to insiders familiar with the matter, NY Post reported.

Neiman Marcus, which owns the iconic Bergdorf Goodman in New York along with its eponymous high-end chain, has been open to a deal with Saks. However, the disagreement over the deal’s structure, especially the significant non-cash component proposed by Saks, has hindered the progress of negotiations. Saks’ offer, valuing Neiman at approximately $3 billion, represents a considerable loss for the Dallas-based retailer, considering its 2005 valuation of $5.1 billion in a series of debt-fueled buyouts.

The rejection is part of a pattern in the on-again, off-again talks between Saks and Neiman, spanning over a decade and often stalling due to disagreements over the price tag. Sources suggest that both retailers will continue to explore the possibility of a deal, although any resolution is unlikely before 2024.

A merger between Saks, with its 41 stores, and Neiman’s 36 stores would likely face antitrust scrutiny. The companies may argue that their dominance in the luxury sector has diminished significantly over the past decade due to the emergence of online retail.

Earlier this year, it was reported that Neiman Marcus’s private equity owners were at odds over a potential exit. Minority investors Davidson Kempner Capital Management and Sixth Street Partners pushed for an immediate sale, while the majority investor, Pacific Investment Management Co. (PIMCO), was inclined to wait, anticipating business improvement.

In August, faced with persistent disappointing results, PIMCO appeared more open to considering a sale, with Hudson’s Bay, Saks’ owner, conducting exclusive due diligence to evaluate Neiman’s business. Neiman Marcus had struggled amid the challenges posed by the COVID-19 pandemic, filing for bankruptcy in May 2020 and subsequently undergoing a restructuring that eliminated significant debt.

Criticism was directed at Neiman Marcus for retaining CEO Geoffroy van Raemdonck despite the company’s financial struggles. Van Raemdonck, who assumed the role in 2018, received multimillion-dollar annual pay packages, including a $1.5 million salary, over $2 million in stock options, and a bonus exceeding $4 million in 2020, the year of the bankruptcy. The executive’s compensation drew attention as the company laid off employees and slashed pensions.

Established in 1907 by Herbert Marcus, his sister Carrie Marcus Neiman, and her husband A.L. Neiman, Neiman Marcus is a luxury department store renowned for its high-end fashion and exclusive designer collections. With a focus on upscale clientele, it has become synonymous with luxury retail, operating iconic stores nationwide.

Representatives for Saks Fifth Avenue and Neiman Marcus declined to comment on the recent bid and rejection. Founded in 1867 by Andrew Saks, Saks Fifth Avenue originated as a small retail store in New York City. Over the decades, it evolved into a premier luxury department store, attracting high-end fashion brands. The flagship store on Fifth Avenue became an iconic destination for upscale shopping, defining elegance and sophistication.