American Neiman Marcus department group is looking for takeover partners
Firstly was announced an initial public offering of stock of department chain Neiman Marcus Inc., now the owners are looking for a possible alternative by asking potential bidders to submit takeover offers next week.
The private investment companies KKR, CVC Capital Partners Ltd. and a team of Ares Management LLC as well as Canada Pension Plan Investment Board are showing interest. The bids are due by next Wednesday and it is not clear if the private equity firms will put their hat in the ring. Others speculate that the entire company will be sold.
Suitors and Neiman’s private equity owners are not in accord on the price for the luxury retailer. Neiman’s owners envision a range of USD 6 billion or more, a sum that would be easily reached in a going public and the interested suitors see a range between USD 5.5 billion to USD 6.0 billion. The actual owners, TPG and Warburg bought Neiman in 2005 for around USD 4.9 billion. Some experts think that the price is to high but should it be paid this would compare to the multiple r of Hudson’s Bay Co. who has agreed to buy Saks Inc, only Saks produces higher margins and enjoys wealthier customers.
A report of WSJ Wall Street Journal cites William Susman, the founder of Threadstone LP, a boutique investment banking firm specialising in retailing, he declared “The Saks transaction illustrates the value of luxury retailing, and there is no greater luxury retailer than Neiman Marcus. TextileFuture has repeatedly reported on the extravaganza of the legendary Christmas Catalogue Neiman Marcus is publishing annually. Susman added: Neiman Marcus is a trophy asset and deserves a trophy valuation”.
Neiman Marcus registered a fiscal annual turnover of USD 4.5 billion (end of April), almost the level it generated before the financial crisis (USD 4.6 billion).
According to the WSJ report, Neiman plans to consider offers until sometime in December, and then focus full time on going public, if none of the buying offers will go through. Such an IPO could therefore be scheduled for the first half of 2014. Since the actual owners are private equity firms are rather looking for a new owner than to go public because the latter takes up more time and effort to finally cash-in, whereas in the first case the cash would be immediately accessible.