Neiman Marcus Sold For $6 Billion, $2 Billion Below Asking Price

Neiman Marcus won't be going public again after all. A U.S. private equity firm and a Canadian pension fund will pay $6 billion to acquire the luxury retailer, the companies confirmed on Monday (Sept. 9).

Ares Management and the Canadian Pension Plan Investment Board will own equal shares of Neiman, while the chain's management will retain a minority stake. Neiman's current owners, private-equity firms TPG and Warburg Pincus, paid about $5 billion for the retailer in 2005, and have been unable to sell it because of lower luxury sales in the wake of the recession. Earlier this year, Neiman's owners were hoping to get as much as $8 billion for the chain.

The sale ends four months of speculation about the century-old retailer's fate. Rumors that Neiman was for sale began to surface in May, and they were followed in short order by word that the chain was reducing its presence in China and suggestions that it might merge with Saks. In June, Neiman announced plans for a $100 million IPO. But Saks was snapped up by Lord & Taylor owner Hudson's Bay in late July, and the sale to Ares and CPPIB makes the Neiman IPO unnecessary.

Luxury retailers' sales have slowly been improving, and Neiman CEO Karen Katz has rolled out more of the chain's Last Call clearance stores and introduced the Cusp contemporary fashion concept into Neiman Marcus stores to attract younger customers, Bloomberg reported. Katz will remain CEO after the sale, according to a Neiman spokeswoman.

But the sale also comes at a time when U.S. consumers are spending less on conventional retail merchandise and more on cars and home furnishings, which has hurt sales at chains like Nordstrom (NYSE:JWN) and Macy's (M). "It is a difficult environment for luxury companies these days because we've seen fewer foreign visitors and the domestic shopper is cutting back because of the uncertain environment," retail analyst Walter Loeb told Bloomberg. Loeb added that the poor outlook might have convinced TPG and Warburg Pincus to forget the IPO and go to a straight sale.

For more:

- See this Bloomberg story
- See this Globe and Mail story

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