NEW YORK — With final bids due today, it looks like Kohlberg Kravis Roberts & Co. and Bain Capital Partners are in prime position in the race for the Neiman Marcus Group.
The KKR/Bain Capital joint bid is competing against the partnership of Thomas H. Lee Partners and The Blackstone Group.
Sources at several financial firms, who spoke on condition of anonymity, predicted KKR/Bain Capital is likely to come in with the winning bid because the partners are willing to accept a lower rate of return on a premium-level investment.
This suggests the winning bid could come in higher than earlier anticipated for the 37-unit luxury retailer, which includes two sites in Manhattan operating under the Bergdorf Goodman nameplate as well as 35 Neiman Marcus stores.
As reported this month, a senior executive at Vornado Realty Trust told investors during a meeting that the price tag for Neiman’s could reach $115 a share, which would push the purchase price to more than $5.5 billion.
The rationale behind such a high premium — Neiman’s shares have been trading at around $93 to $95 on the New York Stock Exchange — is a valuation model that’s not based on current operations, but on expected opportunities with the brand. An offer of more than $5.5 billion, those familiar with the bidding process said, also means the new owners would possibly have to double the store base over time to get an adequate return on their investment when they look to resell Neiman’s.
Another source close to the bidding process said his firm did not pursue an acquisition because the price was getting too high, based on his company’s valuation analysis.
With the bidding on Neiman Marcus nearing its end, hedge funds, institutional investment firm analysts and investment bankers are speculating on other deals in the market.
Most sources agree that the Saks Department Store Group of Saks Inc., if it really is for sale as some speculate, could be problematic at this point because of an ongoing internal investigation of the retailer’s accounting matters as well as a Securities and Exchange Commission formal investigation of the issue.
Regarding J.C. Penney Co. Inc., chief executive officer Myron E. Ullman 3rd outlined the company’s strategic goals in a two-day analysts’ meeting last week. Ullman said the company is on a five-year strategic plan that centers on the moderate-income shopper. While Ullman didn’t address market rumblings regarding a leveraged buyout of his company, he said J.C. Penney will be among the first to capitalize on available real estate opportunities.
“I see things on the hanger and I’m, like, ‘I never knew that color worked on me.’ It’s things you necessarily wouldn’t choose to wear, but once you put them on, you see why Janie is who Janie is." — Lily Collins on working with former "Mad Men" costume designer, Janie Bryant on creating looks for her role as Celia Brady's in Amazon series, "The Last Tycoon." 📸@jilliansollazzo #wwdeye
EXCLUSIVE: Sarah Rutson has been tapped to Build New American Fashion Group. The parent of Joie, Equipment and Current/Elliott hired the merchant to rev up its brands and expand its portfolio into designer, beauty and lifestyle categories. Read more on WWD.com, link in bio. #wwdfashion
Michael Kors' $1.3B Jimmy Choo deal has the company squaring off with Coach Inc. as both seek to build American powerhouses. Coach bought Stuart Weitzman in 2015 and Kate Spade just two weeks ago, but Michael Kors' acquisition may be putting pressure on its rival in the new push for scale. #wwdnews (📷: George Chinsee)
Meet actress Lucy Boynton, who plays opposite Naomi Watts in the recently released Netflix series "Gypsy." Boynton stopped by WWD to talk about her upcoming projects and her nomadic lifestyle. Get all the details on WWD.com. #wwdeye (📷: @dandoperalski)