Neiman Marcus agrees to $5.1 billion buyout by private investment firms

Monday, May 2nd 2005, 8:24 am

By: News On 6

NEW YORK (AP) _ Neiman Marcus Group Inc. on Monday said it has agreed to sell its chain of luxury department stores to two private investment firms for slightly more than $5 billion in cash.

Texas Pacific Group and Warburg Pincus will purchase Neiman Marcus for $100 per share, valuing the company _ which operates 35 Neiman Marcus and two Bergdorf Goodman stores _ at roughly $5.1 billion. The price is a slight premium to Neiman Marcus' closing price of $98.32 on Friday. The shares traded above $100 at times last week, and have risen sharply since mid-March when the company announced it was considering putting itself up for sale.

``We are very pleased with the results of our strategic review,'' said Neiman Marcus Chairman Richard A. Smith. ``This transaction provides outstanding shareholder value and represents an endorsement of the excellent performance of our entire team.''

Smith and his family, who own a ``significant'' portion of Neiman Marcus' stock, separately agreed to vote their shares in favor of the transaction, the company said.

In addition to its stores, Neiman Marcus is well-known for its annual Christmas catalog, which included among its offerings last year a $10 million zeppelin, a $1.7 million winged submarine, and jeweled Mr. and Mrs. Potato Head figurines at $8,000 apiece.

Texas Pacific, which manages over $15 billion in assets, has investments in a number of companies including the retailers Petco, J. Crew and Debenhams and the fast-food company Burger King. Warburg Pincus has about $13 billion under management and invests in the financial services, health care, media and energy industries as well as special situations.

There has been a flurry of retail acquisitions in the last few months, including Federated Department Stores Inc.'s proposed $11 billion acquisition of May Department Stores Co., the $12.3 billion merger of Kmart and Sears into Sears Holdings Corp., and Jones Apparel Group Inc.'s $294 million purchase of Barneys New York.

On Friday, Birmingham, Ala.-based Saks Inc. said it is selling its Proffitt's and McRae's stores to privately held retailer Belk Inc. for $622 million in cash and indicated that it may shed more of its chains.

Investment banks Goldman Sachs and JPMorgan both advised Neiman Marcus on the deal.