Joint bid wins Neiman Marcus auction

PHILADELPHIA - Luxury retailer Neiman Marcus Group is close to agreeing to be taken over by two private equity firms for about US$5 billion ($6.85 billion).

Buyout firms Texas Pacific Group and Warburg Pincus won the auction with a bid that valued the Dallas-based department store chain at about US$100 a share, sources said yesterday.

Neiman Marcus, known for high-end fashion and extravagant Christmas catalogues that feature quirky luxury items such as jewel-encrusted versions of Mr Potato Head or "His and Hers" bowling centres, could not be immediately reached for comment.

The other bidders in the auction included the team of Bain Capital and Kohlberg, Kravis Roberts & Co, and a third group that included the Blackstone Group and Thomas H. Lee.

Although Texas Pacific and Warburg Pincus were the lead bidders for Neiman Marcus, a deal had not been completed and another team could return with a last-minute offer, one source cautioned.

A sale of Neiman Marcus would follow a rush of mergers in the retail industry, coming after Federated Department Stores' agreement to buy rival May Department Stores and the recent purchase of retailer Barneys New York by Jones Apparel Group.

On Friday, Saks said it would sell two regional department store chains for US$622 million to Belk Inc, and weigh the sale of additional stores as it focuses on its Saks Fifth Avenue luxury department store business.

Neiman Marcus, operator of its namesake stores and more specialised Bergdorf Goodman chain, has had six straight quarters of double-digit sales increases at stores open more than a year.

The company said it expects its same-store revenues to rise 5 per cent to 6 per cent in the third quarter.

Blackstone, KKR and Texas Pacific declined to comment.

Bain Capital, Thomas H. Lee and Warburg Pincus could not be immediately reached for comment.

- REUTERS