HBC Deal to Purchase Neiman Marcus Group Seen on Observe

HBC, father or mother to Saks Fifth Avenue, seems on observe to shut its $2.65 billion acquisition of Neiman Marcus Group and will lock in a junk bond providing someday within the subsequent few weeks.

“We’re engaged on a bond. It’s been nicely acquired,” Richard Baker, HBC government chairman and chief government officer, instructed WWD on Wednesday.

Different sources indicated that HBC was working with Jefferies Monetary Group.

“The bond market could be very robust and there’s rather a lot to like about this [Neiman’s] deal,” Baker stated.

He stated he’s working to get the bond executed in a manner that’s “essentially the most environment friendly, quickest and finest manner” doable.

When HBC unveiled the Neiman Marcus deal in July, the corporate stated the acquisition value could be funded by a mix of fairness capital from new and current shareholders and debt amenities, together with Amazon and Salesforce as new buyers. Rhône Capital continues as an investor and Perception Companions, an investor in Saks.com, turns into a shareholder within the mixed firm. Different buyers additionally might have come into the deal since then, sources stated.

As well as, HBC secured a $1.15 billion time period mortgage financing from funding funds and accounts managed by associates of Apollo. “It’s a signed dedication letter from Apollo,” Baker stated Wednesday.

Whereas a number of sources had urged that the funding from Apollo maybe could possibly be unsure, two sources near the method confirmed Baker’s account and stated cash was buttoned up and prepared for use within the deal. Apollo declined remark. 

In July, HBC additionally stated it obtained a $2 billion totally dedicated revolving asset-based mortgage facility from Financial institution of America (lead underwriter), Citigroup, Morgan Stanley, RBC Capital Markets and Wells Fargo.

For some time, it was broadly believed that HBC’s deal to purchase Neiman Marcus would shut early in 2025, presumably February. Nevertheless, Baker urged the deal might shut even sooner. “We’re heading in the right direction to shut the deal. It might probably occur within the subsequent couple of weeks. All the things goes to get accomplished.”

That might be excellent news for distributors, contemplating Saks has been delinquent on funds owed to a lot of them and a number of sources say it continues to be gradual in paying distributors. Final August, a uncommon convention name between Baker, Marc Metrick, CEO of Saks International, and Jennifer Bewley, chief monetary officer of HBC, offered updates to Saks and Saks Off fifth distributors. Whereas apologetic about how distributors have been handled, the executives urged them to stay with Saks and Saks Off fifth, and expressed excessive confidence that the deal to purchase the Neiman Marcus Group would quickly shut, finally benefiting — and never hurting — them.

The executives stated on the time that new financing and fairness infusions by the deal, future property gross sales and fall 2024 promoting would enhance liquidity, serving to them to make amends for excellent funds to distributors, many months previous the common 60-day interval. In addition they stated they might be extra clear and communicative going ahead. Nevertheless, as soon as HBC takes over Neiman Marcus, the brand new and greater retail entity created would have the ability to exert higher shopping for energy over the distributors.

Initially the federal government was anticipated to take an in depth take a look at the deal particularly, as a result of it concerned Amazon and, within the view of many observers, as a result of it put HBC able to lift costs, shut shops, lay off staff and improve stress on distributors. However the Federal Commerce Fee, which efficiently derailed Tapestry Inc.’s $8.5 billion acquisition of Capri Holdings, gave the deal a inexperienced gentle with out making a second request for extra data.

Saks International already encompasses Saks Fifth Avenue, Saks Off fifth and actual property property and, as soon as the deal is closed, will embrace Neiman Marcus and Bergdorf Goodman. Baker serves as government chairman of Saks International, which is ready to generate $10 billion in gross sales, with Saks accounting for about $6 billion of that and Neiman’s making up the opposite $4 billion. Executives concerned within the deal have stated that every retail banner would proceed operations beneath their respective manufacturers.

For years, many within the trade have anticipated a Saks-Neiman’s mixture. In truth, the day Baker disclosed that HBC was buying Saks Fifth Avenue in 2013, he additionally instructed WWD that he would at some point purchase the Neiman Marcus Group to create a North American luxurious retail empire.

Sources have instructed WWD that there’s a $100 million breakup charge entitled the Neiman Marcus Group if the deal fell by. Baker didn’t touch upon that, however the charge could be one other incentive to get the deal accomplished.

The deal has grow to be type of a nexus level for rumors and anxiousness within the style trade with:

When the transaction lastly closes and Saks and Neiman Marcus finish what has grow to be a years-long dance, all of the “what ifs” can be accomplished and the style ecosystem that depends on the retailers must flip to the following query. What now?