updated 5/2/2005 9:15:00 AM ET 2005-05-02T13:15:00

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.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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