By Tracie Rozhon, New York Times
After two private equity firms announced the deal this week to buy the Neiman Marcus Group for slightly more than $5 billion, shareholders expressed their disappointment that the firms would get all the company’s assets – even the credit card business. Investors were clearly hoping for a separate, additionally lucrative sale.
Neiman’s Class A shares fell on yesterday’s announcement, closing at $92.96, down $5.36. “The shareholders were hoping for another payday,” said one executive involved in the deal.
The two equity firms, Texas Pacific Group and Warburg Pincus, will receive any money gained from a sale of Neiman’s credit card business, said executives on both sides of the negotiations. Several of the world’s biggest credit companies, including American Express and Citigroup, are bidding around $500 million for roughly the same amount in receivables; that is, the amount that Neiman’s customers have charged and currently owe the company.
Whoever gets the credit card business will also get an extremely valuable list of many of America’s richest shoppers – and exactly how much they spent for that four-lane basement bowling center featured in last Christmas’s catalog ($1.5 million, and that was just the base price; a flat-screen television or dance floor was extra).
For the two equity firms, an imminent credit card sale will give them a quick infusion of cash. “That’ll serve as the down payment,” one executive said.
For this complete story, please visit Neiman Marcus Deal Disappoints Investors Looking for a Second One (free registration required).
