The Luxury Retail Merger Appears to Have Been Approved by DOJ After Long Review Period
The merger between Saks and Neiman Marcus appears to have received approval from the U.S. Department of Justice. The clearance comes as the department’s review period expired without any objections, according to insiders.
HBC, which owns Saks, chose not to comment on the situation. The company had announced its intent to purchase the Neiman Marcus Group for $2.6 billion on July 4, and the deal had been under the Justice Department’s review since then. Internal sources have stated that there had been no objections to closing the transaction since the review period has expired.
Once the deal was unveiled, HBC made a presentation to the Federal Trade Commission on July 19. The FTC had to consider potential trade restraint issues. Following the presentation, either the FTC or the Department of Justice had 30 days to request more information. This period ended on Monday midnight, as one source detailed.
As neither of these agencies requested extra details from HBC, it effectively cleared the way for the transaction. It’s still uncertain whether the government informed HBC to go ahead with the deal, or if the 30-day period simply expired without any communication. “HBC got nothing,” the source clarified, indicating that the government wouldn’t necessarily communicate about advancing the deal.
The exact time frame for closing the deal remains unclear. Considering the $6 billion purchase price in 2013 and recent speculation predicting a price over $3 billion for Neiman’s, it seems that Saks is affording a bargain with the $2.65 billion tag.
The government might have been wary about HBC increasing prices, shutting down stores, laying off employees, or increasing pressure on suppliers. Government bodies have previously scrutinized big business transactions, such as Microsoft, Meta, American Airlines and JetBlue, and also in fashion/retail, like FTC’s interdiction of Tapestry Inc.’s $8.5 billion Capri Holdings purchase. The government claimed the deal would harm market competition.
Industry experts speculated that the Saks-Neiman merger would likely succeed due to an expanding luxury market in the U.S. The market competition has intensified, with designers managing their own stores and websites, while selling to a growing number of independent fashion websites. Therefore, designers and vendors are less reliant on supplying to Saks or Neiman’s.
There was anticipation that the government may require HBC to sell off certain stores in markets or malls where Saks and Neiman’s both exist, but it seems unlikely. As the same source confirmed, “There were no objections” from the government.
Richard Baker, executive chairman and CEO of HBC, and Marc Metrick, CEO of Saks Global, are scheduled to conduct a podcast on Wednesday to provide updates on the business. Saks Global includes luxury retail and real estate assets such as Saks Fifth Avenue, Saks Off 5th, Neiman Marcus, and Bergdorf Goodman. The businesses will continue to operate under their respective brands. Saks Global records $10 billion in sales, with Saks contributing approximately $6 billion, and Neiman’s about $4 billion.