The parent company of Saks Fifth Avenue has finalized a $2.65 billion deal to acquire its rival, Neiman Marcus, creating a powerhouse in luxury retailing. Both companies' boards have approved the transaction, which will result in the formation of a new entity called Saks Global. This move aims to retain wealthy shoppers and counter the challenges faced by both companies due to decreased spending on luxury goods and competition from fashion brands' flagship stores. The combined company is expected to generate approximately $10 billion in annual sales. Amazon will take a minority stake in the new company and provide it with technology and logistical expertise, while Salesforce will also become a minority shareholder and assist with the adoption of artificial intelligence. The deal is being financed by HBC, the parent company of Saks, with support from existing investors and debt financing from affiliates of Apollo Global Management. The acquisition will solidify Saks Global's position as the dominant player in the luxury retail market, with a combined total of 75 stores, including two Bergdorf Goodman stores, and 100 off-price stores. The new entity will be led by Marc Metrick, the current chief executive of Saks and Saks.com. The involvement of Amazon and Salesforce in the deal marks a significant development, as it provides Amazon with unprecedented access to the luxury market and signifies a strategic move for the tech giant. This acquisition represents a major consolidation in the luxury retail sector and comes at a time when both Saks and Neiman Marcus have been navigating a slowdown in luxury spending.
