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The luxury retail landscape is headed for a major shift with Hudson's Bay Co. slated to buy Dallas-based Neiman Marcus Group LLC.
The boards of both HBC and Neiman Marcus have approved the deal, the companies said July 4. They noted regulatory approvals are still needed, so the finalization of the buyout is not imminent.
Here are a few more things we learned about the proposed $2.65 billion merger in the wake of last week's big announcement.
Merger will create new company: Saks Global
HBC, which is based in Toronto and New York City, said it would combine subsidiaries Saks Fifth Avenue and Saks Off 5th, a discount chain, with Neiman Marcus and its subsidiary, Bergdorf Goodman. It plans to create a new company called Saks Global but the individual brands will remain intact, so the iconic Neiman Marcus name isn't going anywhere.
The new company was described as a "technology-powered luxury retail company" that is "well positioned to meet customers’ increasing demands for a highly personalized, seamless experience with greater opportunities for product discovery across all channels." It alluded to "advancements in online functionality and fulfillment processes," with promises to use artificial intelligence "to create individualized online shopping experiences and empower sales associates to better serve customers."
The company will be led by Marc Metrick as CEO. He's currently chief executive at Saks.com. Metrick will report to Richard Baker, HBC CEO and executive chairman.
Metrick told the Dallas Morning News that what the deal means for Neiman Marcus Group CEO Geoffroy van Raemdonck and the company's Dallas headquarters remains undecided and that those discussions can really advance once regulatory approvals are secured.
The deal includes a lot of real estate
The announcement also called attention to the combined company's $7 billion portfolio "of prime retail real estate assets in top-tier luxury locations."
Neiman Marcus, founded in 1907, has 36 stores across the United States and more than 10,000 employees. Bergdorf Goodman has two stores.
Meanwhile, HBC owns or controls roughly 42 million square feet of gross leasable area.
Ian Putnam, currently president and CEO of HBC Properties and Investments, will become CEO of Saks Global Properties and Investments and report to Baker.
Amazon, Salesforce are joining as investors
The deal will be funded by equity capital from new and existing shareholders and debt, according to the announcement. The debt will be a $1.15 billion term loan from investment funds and accounts managed by affiliates of Apollo Global, as well as a $2 billion revolving asset based loan facility from lead underwriter Bank of America as well as Citigroup, Morgan Stanley, RBC Capital Markets and Wells Fargo.
Amazon and Salesforce will become minority investors in Saks Global. Rhône Capital will remain lead investor while Insight Partners, an investor in Saks.com, will be a shareholder in the new company.
Van Raemdonck referred to the arrangement as "a new long-term capital structure."
Additionally, HBC said it plans to break off its Canadian business as a recapitalized, standalone entity. HBC will continue to own its Canadian retail and real estate assets, including Hudson’s Bay.