Neiman Marcus has been sold — and at a suitably luxurious price.
The swanky retailer’s private-equity owners have sold it today for $6 billion to a team formed by the buyout firm Ares Management and the Canada Pension Plan Investment Board.
That’s a good, though not great, premium to the $4.9 billion that was paid eight years ago by Neiman’s current owners, David Bonderman’s TPG, Warburg Pincus and Leonard Green & Partners.
On a price-to-cash-flow basis, the valuation of the owner of Bergdorf Goodman is also on par with that of archrival Saks, which recently was acquired by Hudson’s Bay, the Canada-based owner of Lord & Taylor.
Banking sources said the sale price is impressive, given that Neiman weathered a recession that has left its revenue lagging below highs it realized before the 2008 banking crisis.
As reported by The Post yesterday, negotiations continued into yesterday afternoon as the parties scrambled to hammer out a deal.
Top Neiman execs recently had expressed concerns about putting too much debt on the company as it changes hands, sources told The Post last month.
While a more highly leveraged transaction is capable of fetching a higher price, Neiman’s managers led by CEO Karen Katz fretted that burdensome debt obligations have hampered growth.
“A lot of ideas on how to improve and grow just weren’t possible to execute, given the high amount of leverage,” according to one former Neiman exec.
Katz, who will remain CEO of the retailer, said in a statement today she was “very impressed by the commitment of Ares and CPPIB to learning our business.”
Ares and the Canada Pension Plan appeared to have outbid another buying bloc formed by KKR and CVC Capital, sources said.
Neiman earlier this summer had been in advanced talks with a Qatar-based investment fund to take the retailer private. Those talks fell apart, according to sources.
A sale is a relief to Neiman’s current owners, who had filed in June to take Neiman public, even as adviser Credit Suisse scrambled to find a buyer. That’s because an initial public offering would only allow them to initially float a portion of the company, versus exiting it entirely and pocketing the gain immediately
Neiman’s owners have been looking to exit their investment for several years now. A key stumbling block has been convincing potential bidders that the business still has room to grow.