Luxury – A Deal at $5 Billion
By George Anderson
The cost of luxury is quite high precisely $5 billion.
That’s what it cost the equity firms of Warburg Pincus and Texas Pacific Group to buy the luxury retailer Neiman Marcus.
With the deal, the new owners acquire 35 Neiman Marcus and two Bergdorf Goodman stores along with the company’s catalog and online operations.
Unlike other recent deals for large retailers, the Neiman Marcus sale did not represent a troubled company looking for a white knight of sorts.
The luxury chain has experienced consistent and strong growth with six straight quarters of double-digit gains in its same-store numbers.
The sale, according to various reports, was made because of Richard Smith’s, chairman of Neiman Marcus, desire to sell his stock in the company. According to a report in The Wall Street Journal, “the Smith family owns 12.7% of Neiman stock, and 31.1% of the company’s Class B shares, as of the company’s latest proxy filing. The Class B shares command about 80% of the vote of the board of directors. Mr. Smith’s son, Robert, and son-in-law, Brian Knez, serve as vice chairmen of the Neiman Marcus Group.”
The company’s chief executive, Burton Tansky, and other top executives are expected to remain in their positions after the sale.
Moderator’s Comment: What do you 1) think about the Neiman Marcus deal and 2) about the recent merger and acquisition activity in the retail business?
George Anderson – Moderator
- Neiman Marcus Nears $5 Billion Deal The Wall Street
Journal (sub. required)
- Neiman Marcus Nears $5 Bln Takeover Deal Reuters