(Reuters) – Saks Fifth Avenue parent HPC Inc said on Monday it will acquire department store chain Neiman Marcus Inc in a $2.65 billion deal, giving it stronger negotiating power with vendors and greater control over costs.
The deal comes as luxury retailers face slowing demand as higher interest rates and inflation force customers to tighten their budgets, following a post-pandemic luxury retail boom.
HBC said it will create Saks Global, a combined entity that includes Saks Fifth Avenue, Neiman Marcus and other luxury retail and real estate assets.
Neiman’s filed for bankruptcy protection in 2020 after the pandemic forced it to close Neiman and other stores across the United States, devastating the company’s revenue.
Neiman Marcus is known for selling designer dresses, shoes, handbags and other luxury products, catering to the needs of wealthy customers.
Reuters reported on Wednesday that HBC agreed to buy Neiman Marcus.
Mark Metrick, CEO of Saks E-Commerce, will lead the combined company.
Saks Global will compete as a combined entity with Nordstrom (NYSE:N), Bloomingdale’s (NYSE:B), and Macy’s (NYSE:M), which is reportedly in talks to sell itself to Arkhouse Management and Brigade Capital Management for about $6.9 billion.
Online retailer Amazon.com (NASDAQ:) and customer relationship management software provider Salesforce (NYSE:) will also be investors in Saks Global, providing technology, logistics and help integrating artificial intelligence, HBC and Neiman said.
Rhone Capital, a private equity firm and an existing investor in HBC, will be the lead investor in Saks Global.
HBC is financing the deal through cash raised from new and existing shareholders and debt. Private equity firm Apollo Global Management (NYSE:APM) is providing $1.15 billion in debt financing.
Sachs’ owner also secured $2 billion in debt financing from a group of Wall Street banks.
JPMorgan Chase and Lazard (NYSE:) acted as financial advisors to Neiman Marcus on the deal.