Willkie Farr, Sullivan & Cromwell counsel Saks owner and Neiman Marcus Group in $2.65bn retail luxury acquisition

Deal marks efforts to boost the combined brands’ ability to compete in the luxury market

The acquisition will give the struggling luxury retailers more power to negotiate with vendors Shutterstock

Two New York law firms are helping a luxury retailer make its own high-end purchase.

Willkie Farr & Gallagher is representing Hudson’s Bay Company (HBC), parent company of Saks Fifth Avenue, in its $2.65bn acquisition of rival retailer Neiman Marcus Group (NMG), parent company of Neiman Marcus and Bergdorf Goodman. Sullivan & Cromwell is acting for longtime client Neiman Marcus on the deal. 

The acquisition is widely viewed as a way to give both struggling luxury retailers more power to negotiate with vendors. It comes as luxury retailers are grappling with slowing demand, in stark contrast to the boom seen after pandemic-related restrictions eased in 2022, as US customers have become more cautious about high-end purchases. Dallas-headquartered Neiman Marcus has been in the red since it emerged from bankruptcy in 2020, having been one of the high-profile collapses among retailers forced to temporarily close stores in response to the Covid-19 pandemic.

When the transaction closes, New York-based HBC will create Saks Global, a combination of luxury retail and real estate assets, including Saks Fifth Avenue, Saks OFF 5TH, Neiman Marcus and Bergdorf Goodman, each of which will continue to operate under their individual brands. 

HBC said it expected the purchase price to be funded by a combination of equity capital from new and existing shareholders and debt facilities. Additionally, Amazon and Salesforce will take minority stakes in the combined company, assist with the adoption of artificial intelligence, and provide technology and logistical expertise. Rhône Capital, a transatlantic mid-market private equity firm and affiliated investment entities, will continue as the active lead investor in Saks Global. Global software investor Insight Partners, an investor in Saks.com, will be a shareholder in the new company. 

Current Saks.com CEO Marc Metrick will become CEO of Saks Global, leading the company’s retail and consumer businesses and overseeing the luxury shopping experience strategy.

“Saks has remained steadfast in our commitment to be at the forefront of luxury fashion,” Metrick said in a statement. “We have respect and admiration for Neiman Marcus Group and the contributions its teams have made in the company’s evolution. Together, with our focus on innovation, we are primed to drive growth for our brand partners and create career development opportunities for the talent across Saks Global.”

The Willkie team guiding HBC was led by corporate partners Gregory Astrachan, Michael Brandt and Tej Prakash, finance partner Viktor Okasmaa and finance counsel Michael Wolynski. 

The firm has advised HBC on numerous matters in the past, including its €2.8bn acquisition of German department store chain Galeria Kaufhof in 2015 from Metro and the sale of its Lord & Taylor Fifth Avenue building in Manhattan to WeWork in 2019 for $850m. 

Three years ago the firm also represented Insight Partners in the formation of a partnership with HBC to establish Saks Fifth Avenue’s ecommerce business as a standalone entity, in a deal that saw Insight make a $500m minority equity investment in Saks. 

Meantime Sullivan & Cromwell represents Neiman Marcus in acquisition financings of all types, including its LBO financing, according to its website. This time round the team included corporate partners Melissa Sawyer and Lauren Boehmke and associates Lisa Morales and Charlie Wowk; executive compensation partner Jeanette Bander; finance partner Neal McNight and associate R. Courtland Morrice; tax partners Davis Wang and Ha Jin Lee; and antitrust partners Renata Hesse and Samantha Hynes. 

There are 39 Saks Fifth Avenue stores and 95 Saks Off 5th discount stores. Meantime Neiman has 36 department stores, two Bergdorf Goodman stores and five Last Call discount stores.

M. Klein & Company served as the lead financial advisor and capital markets advisor to HBC on the acquisition. Solomon Partners also served as a financial advisor to HBC and Deloitte served as a financial and tax advisor.

Meantime JP Morgan and Lazard served as financial advisors to Neiman Marcus on the deal and Berenson & Company served as financial advisor to Insight Partners.

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