Neiman Marcus Sold in $6 Billion Deal

9/9/2013
Ares Management LLC and Canada Pension Plan Investment Board report that their affiliates have agreed to acquire Neiman Marcus Group LTD Inc. from a group of investors led by TPG and Warburg Pincus for $6 billion.

A portion of the purchase price will be used at the closing to repay all amounts outstanding under the company's existing credit facilities other than its Debentures. Ares and CPPIB will hold an equal economic interest in the legendary retailer, and the company's management will retain a minority stake. The transaction is expected to close in the fourth quarter of 2013, subject to regulatory approvals and other customary closing conditions.

Dallas-based Neiman Marcus Group is one of the largest U.S. luxury retailers, comprising 79 stores totalling more than 6.5 million gross square feet. The company operates 41 Neiman Marcus Stores, two Bergdorf Goodman locations in Manhattan and 36 Last Call outlet centers. Its upscale online retailing division operates under the Neiman Marcus, Bergdorf Goodman, Last Call and Horchow brand names.

"We are delighted to join with CPPIB as a long-term investor in Neiman Marcus Group, a leading luxury retailer with global brand recognition that attracts shoppers from all over the world. We share a common vision with the company's management team, led by its highly respected Chief Executive Officer Karen Katz, and together, we plan on investing meaningful capital into the business to ensure Neiman's long-term position as the unparalleled leader in luxury retail," said David Kaplan, senior partner and co-head of the Private Equity Group of Ares. "This investment fits with our longstanding approach of accelerating growth in companies in the consumer and retail sectors. As a result of this philosophy, we believe we have achieved superior growth with many consumer-facing businesses including Floor & Decor, General Nutrition Centers, House of Blues, Maidenform Brands, Samsonite, Serta, Simmons, Smart & Final and 99¢ Only Stores."

"This is an excellent opportunity to invest in a leading omni-channel luxury retailer, operating two of the most iconic retail brands in the U.S.," said AndrÉ Bourbonnais, senior vice president, Private Investments, CPPIB. "We believe the company's strong market position, combined with an expected increase in U.S. luxury goods spending, provide attractive opportunities for future growth. We are excited to partner once again with Ares, a like-minded, long-term partner of ours."

"On behalf of the entire management team, we are delighted to be joining with Ares and CPPIB to continue enhancing our strong brands by offering our customers the best edited merchandise assortments as well as delivering a superlative omni-channel shopping experience. For the past eight years, TPG and Warburg Pincus have been valued partners whose investment has supported our growth and strengthened our brands," said Karen Katz, president and CEO of Neiman Marcus Group.

"In working through the transaction, I have been very impressed by the commitment of Ares and CPPIB to learning our business," Katz continued. "I have great confidence that our customers, associates and vendor partners will share my enthusiasm that our new investors will help us pursue a business dedicated to luxury and fashion, attentive service and innovative marketing."

Credit Suisse acted as financial advisor to Neiman Marcus Group, and RBC Capital Markets and Deutsche Bank Securities Inc. acted as financial advisors to Ares and CPPIB, all of which provided committed debt financing in connection with the transaction. Cleary Gottlieb Steen & Hamilton LLP acted as legal counsel to Neiman Marcus Group. Proskauer Rose LLP acted as transaction counsel and Latham & Watkins LLP acted as finance counsel to Ares and CPPIB. Torys LLP acted as counsel to CPPIB.
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