Saks Owner Closes in on $2.65 Billion Neiman Marcus Acquisition

In a significant move in the retail industry, Hudson’s Bay Co., owner of Saks Fifth Avenue, is reportedly close to finalizing its $2.65 billion acquisition of Neiman Marcus Group. The merger aims to combine the two largest U.S. luxury department store chains to better cope with the challenges of a sluggish industry.

The acquisition comes amid increased transaction activity in the department store sector, fueled by falling stock prices and valuable real estate holdings. Hudson’s Bay, which owns the Canadian department store chain, sees potential in Neiman Marcus’s real estate and market positioning. Geographically, Saks and Neiman Marcus have minimal overlap, with Saks more visible on the East Coast and Neiman having a larger presence in the southern and western United States.

The deal, years in the making, gained momentum after Neiman Marcus filed for bankruptcy in 2020. That restructuring made the company a more attractive acquisition target, especially as luxury sales have weakened recently. The new ownership group, which includes Pacific Investment Management Co., Davidson Kempner Capital Management and Sixth Street Partners, is looking for a faster return on its investment, not a prolonged retail recovery.

Marc Metrick, CEO of Saks Fifth Avenue’s online operations, is expected to lead the combined companies. The acquisition, expected to be announced soon, is the culmination of protracted negotiations between the two private competitors.

Hudson’s Bay isn’t going it alone. Amazon.com Inc. and Salesforce Inc. are set to facilitate the takeover by taking minority stakes in a newly formed entity called Saks Global, according to a person familiar with the matter. That new company will manage the combined operations, which include 39 Saks Fifth Avenue stores, 36 Neiman Marcus locations and two Bergdorf Goodman stores in Manhattan. The deal also aims to cut costs and boost profitability by leveraging combined bargaining power with suppliers and streamlining supply-chain operations.

Amazon’s involvement is particularly notable. It would be one of Amazon’s first significant investments in a physical retailer since acquiring Whole Foods in 2017. Amazon’s minority stake in Saks Global is in line with Amazon’s growing interest in the luxury retail sector, adding a strategic dimension to the deal. Salesforce, known for its partnerships with luxury brands like Louis Vuitton and McLaren, is also expected to contribute to the new venture.

Analysts expect the Saks-Neiman deal to attract regulatory scrutiny. Under FTC Chairwoman Lina Khan, the agency has ramped up its challenges to mergers, including a recent lawsuit to block the Coach owner from taking over Michael Kors’ parent company. That increased antitrust activity suggests the Saks-Neiman merger will face intense scrutiny before final approval.