The most recent acquisition attempt by Saks Fifth Avenue on its competitor Neiman Marcus has been rejected, as the two high-end retailers struggle to agree on merger terms.
According to the Wall Street Journal, Neiman rejected Saks' latest offer, which valued Neiman close to $3 billion. Those privy to the matter revealed that Neiman objected to the deal's structure, which did not primarily consist of cash.
The two retailers have been engaged in negotiations for months, a continuation of intermittent talks that have been ongoing for over a decade. If successful, a merger could provide the companies with greater influence with designer brands as consumer luxury spending dwindles.
The discussions are still ongoing. However, if any agreement is reached, it is highly unlikely to materialize before early next year.
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Both retailers have faced recent financial challenges. Neiman filed for bankruptcy in 2020 but has since regained some stability after reducing its debt through court protection. Saks, controlled by HBC, has delayed payments to some suppliers to maintain its cash flow.
HBC, also the proprietor of the Hudson’s Bay department-store chain in Canada, recently raised $340 million through the sale of real estate, according to the Wall Street Journal. The funds will be used to support its retail operations.
A potential merger between Saks and Neiman could lead to improved terms with suppliers and eliminate duplicate costs. The retail giants currently operate 75 department stores between them.
In 2020, Neiman filed for bankruptcy and successfully reduced its debt by $4 billion through restructuring. Today, it is owned by several entities, including Pacific Investment Management, Davidson Kempner Capital Management, and Sixth Street Partners.
Luxury brand sales in the U.S. have been declining, with the likes of Kering, Burberry, and Prada reporting reduced revenues. Both Saks and Neiman have also recorded a drop in sales from their previous year's pace.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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