Saks-Neiman deal ‘synergies are very, very large’: says former HBC boss

Jerry Storch – the chief executive of Storch Advisors is all praise for HBC acquiring Neiman Marcus for $2.65 billion.

Storch has previously served as the head of HBC as well.  

The merger announced this week will bring a bunch of iconic luxury names like Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman under one roof as “Saks Global”.

Why is Storch constructive on Saks-Neiman deal?

Storch is positive on Saks-Neiman deal as “the consumer and operating synergies are very, very large”.

Coming together will enable the two companies to offset key vendors likes LVMH and Chanel “who are trying to go direct to the customers and disintermediate the wholesale type channel which is Saks and Neiman”, he said in an interview with CNBC today.

Neither HBC nor Neiman Marcus is currently a publicly listed company.

Saks-Neiman agreement will face regulatory scrutiny

Saks Fifth Avenue is doing relatively better in the post-pandemic world than Neiman Marcus. On “Money Movers”, Jerry Storch said on Friday:

“Neiman went through a bankruptcy where Saks has invested in its buildings, invested in technology. And what is now the better company is acquiring the other one.”

The combined company is expected to have about $10 billion in annual sales. Richard Baker – the chief executive of HBC will serve as the executive chairman of Saks Global.

Note that the Saks-Neiman $2.65 billion agreement will likely face regulatory scrutiny as the FTC remains rather stern towards consolidation in fashion retail.

Amazon to take a minority stake in Saks Global

Jerry Storch is constructive on the Saks-Neiman transaction also because Amazon.com Inc will take a minority stake in Saks Global that in turn will benefit from its tech and logistics expertise.

Who’s also partnering on this deal is the San Francisco-headquartered cloud-computing giant Salesforce Inc. According to Storch:

“The two of them together have some of the best technology in the world. They’re best in class. And one of the keys for Saks and Neiman to succeed against vendors is leveraging technology to empower the sales force.”

Following the completion of the transaction, Marc Metrick, the chief executive of Saks.com will serve as head of the Saks Global business while Ian Putnam, the chief executive of HBC Properties and Investments will assume the role of Saks Global’s property and investment business CEO.

Lower Manhattan, New York based HBC plans on financing the Neiman Marcus acquisition with $2.0 billion it has already raised from its existing investors, as per the Wall Street Journal.