Saks’ latest $3B bid to take over Neiman Marcus rejected

Saks Fifth Avenue’s latest $3 billion bid to buy Neiman Marcus was rejected this week, people familiar with the proposed marriage of the two luxury retail archrivals revealed.

Neiman is reportedly open to a deal with Saks — which has tried three times to acquire its smaller but formidable competitor — but the two can’t seem to agree on the terms of a once-unthinkable merger, sources told The Wall Street Journal.

Saks’ offer valued Neiman — which owns Bergdorf Goodman in New York on top of its namesake high-end chain — at roughly $3 billion. Per Saks’ deal structure, a significant portion of that sum wasn’t in cash, which Dallas-based Neiman wasn’t happy about, according to The Journal.

The sum would mark a multibillion-dollar loss for Neiman, which in 2005 fetched $5.1 billion in the first of a series of debt-fueled buyouts that ended up crippling the company.

This week’s rejection, however, is just the latest in Saks and Neiman’s on-again off-again talks about a merger, which date back more than a decade and have largely fallen apart over disagreements over the price tag, sources told The Post earlier this year.

The Journal reported that both retailers will continue to mull a deal, though one likely won’t be reached before 2024.

The merger of Saks, which currently operates 41 stores, with Neiman’s 36 stores would almost certainly face antitrust scrutiny. Insiders say the companies would likely argue that their dominance in luxury has sharply eroded over the past decade with the rise of the internet.

As The Post exclusively reported in June, Neiman’s current private equity owners have squabbled over a potential exit. Neiman’s two minority investors — Davidson Kempner Capital Management and Sixth Street Partners — have been pushing for an immediate sale.

But the 116-year-old company’s majority investor — Pacific Investment Management Co., better known as PIMCO — had been willing to hold on longer, arguing that the business will improve, sources confirmed at the time.

By August, Neiman’s persistently disappointing results appeared to have finally swayed PIMCO to weigh a possible sale to 156-year-old Saks’ Toronto-based owner, Hudson’s Bay, which executed exclusive due diligence to evaluate Neiman’s business, sources with knowledge of the negotiations told The Post this summer.

Hudson’s Bay likely took Neiman’s inability to shoulder losses from the coronavirus pandemic into account. The chain declared bankruptcy in May 2020, blaming the pandemic for spoiling its turnaround and forcing it into a restructuring.

Neiman said it emerged from its high-profile collapse just four months after announcing its Chapter 11 bankruptcy protection process thanks to a restructuring plan that eliminated more than $4 billion of debt and $200 million of annual interest expense.

The luxury department store simultaneously announced that it was shaking up its board, and named former LVMH and eBay executives as directors, though CEO Geoffroy van Raemdonck would remain in the top job.

Neiman drew criticism over keeping van Raemdonck in his cushy position as he was known to take lavish pay packages for himself, even as the company he ran lost money, laid off employees and slashed pensions.

In 2020 — the year of Neiman’s bankruptcy — he walked away with a $1.5 million yearly salary, not to mention more than $2 million in stock options and a payment of $172,135 to offset taxes.

Including his $4 million bonus, van Raemdonck reportedly walked away with a pay package that topped $6 million in 2020.

In the year leading up to Neiman’s bankruptcy filing, van Raemdonck received three pay raises that saw his annual salary jump from $1 million to $1.2 million and finally to $1.5 million by early March 2019. Along with each bi-weekly paycheck, the executive also received a $19,230 bonus check, according to court documents.

Representatives for Saks Fifth Avenue at Hudson’s Bay and for Neiman Marcus declined to comment.