After several months sitting in the display case, Neiman Marcus Inc. appears close to having a buyer.
A team of Ares Management LLC and the Canada Pension Plan Investment Board are in the final stages of negotiations to buy Neiman Marcus for around $6 billion, said people familiar with the matter, in a move that would shift the luxury retailer from one set of private-equity ownership to another.
The two sides were racing to finalize and announce a completed deal, the people said. The discussions remained under way Sunday and could still fall apart, some of the people said.
A sale of Neiman to the private-equity investors for around $6 billion would be considered a decent outcome for its owners. Neiman, purchased by private-equity firms TPG and Warburg Pincus LLC for $4.9 billion in 2005, has been looking for an outright buyer for the retail chain while simultaneously laying the groundwork for an initial public offering of stock. The retailer’s owners also include private-equity firm Leonard Green & Partners LP.
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In recent weeks Neiman held discussions with the team of Ares and the CPP Investment Board, as well as KKR & Co. and CVC Capital Partners Ltd. about a possible sale, people familiar with the matter have said. Ares is currently an owner of 99¢ Only Stores, Floor & Decor Outlets of America Inc. and Smart & Final Stores LLC, according to the Ares website. Neiman also sounded out sovereign-wealth funds regarding a purchase of the chain earlier this year to no avail, people familiar with the matter have said.
Buyout firms usually prefer selling companies they own instead of taking them public so they can realize investment returns immediately. Selling restrictions and stock-market fluctuations associated with IPOs can make cashing out at an attractive price a longer, more difficult process for private-equity firms. The result is that buyout firms often solicit outright buyers even as they make IPO preparations.
Date: September 8, 2013