Neiman Marcus agrees to $5.1 billion buyout

[TexasStooge]

DALLAS, Texas (WFAA ABC 8/AP Wire) - Neiman Marcus Group, the luxury retailer founded in Dallas nearly a century ago, today announced that it's being sold for $5.1 billion.

Two private investment firms, Fort Worth-based Texas Pacific Group and New York-based Warburg Pincus, agreed to pay $100 a share.

Neiman shares rose 12 cents Friday to $98.32 in anticipation of a deal. The company said in March that it was exploring the possibility of a sale.

"We are very pleased with the results of our strategic review," Richard A. Smith, Neiman Marcus Group chairman, said in a statement released before the markets opened Monday. "This transaction provides outstanding shareholder value and represents an endorsement of the excellent performance of our entire team."

Burt Tansky, Neiman's president and chief executive officer, said the company's new owners "share our interest in the strong future of our company." He said in a statement it will be "business as usual" for Neiman Marcus as the change in ownership goes forward.

"We are delighted to be partnering with Burt Tansky and the rest of the Neiman Marcus management team," said Texas Pacific Group partner Jonathan Coslet in the joint statement. "Together, we hope to build on their exceptional track record of performance."

A separate transaction for Neiman's credit card operation is expected to come soon and could fetch more than $500 million.

The deal makes 98-year-old Neiman locally owned for the first time since it was sold by the Marcus family in 1969.

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.

Texas Pacific was founded in 1992 by David Bonderman, James Coulter and William Price III. The firm's investments include retailers J. Crew and Bally International, fast-food chain Burger King and America West Airlines.

The Neiman purchase is an exception to its strategy of buying troubled companies to turn around.

Under chief executive Burton M. Tansky, Neiman has pulled away from luxury competitors such as Saks Fifth Avenue, achieving record profits and sales growth.

The timing of the sale has been viewed as a way for the Smith family of Boston to cash in on its 20-year investment.

The Smith family owns 12.7 percent of the outstanding shares in Neiman, including almost a third of the powerful Class B shares. Class B shareholders control the board of directors.

In 1984, Richard A. Smith, then chairman of the General Cinema theater chain, made a $300 million investment in Carter Hawley Hale, which owned Neiman at the time. Neiman co-vice chairmen are Robert Smith, 45, and Brian Knez, 47, son and son-in-law of Richard Smith.

The Smiths' legacy has been to hire the best people and support their strategy.

Mr. Tansky and other top executives, including Karen Katz, chief executive of Neiman Marcus Stores, are expected to stay on.

Neiman's holdings include a majority interest in Gurwitch Products LLC, which distributes and markets the Laura Mercier cosmetics line, and Kate Spade LLC, a manufacturer and retailer of high-end designer handbags and accessories. It has a successful Internet and catalog business that includes Horchow. Last year, it sold its Chef's Catalog to Pikes Peak Direct Marketing.

Still, Neiman has managed to maintain measured growth. The company operates 35 namesake stores, two Bergdorf Goodman locations in New York and 14 Last Call clearance centers.

Neiman's board of directors considered offers from three groups of investment firms over the weekend. The second bidding team was Kohlberg Kravis Roberts & Co. and Bain Capital, and the third was Thomas H. Lee Partners and the Blackstone Group.

The Dallas Morning News writer Maria Halkias, the WFAA.com staff and The Associated Press contributed to this report.