US private equity major KKR & Co LP (NYSE:KKR) is mulling over investing in retail store operator Saks Inc (NYSE:SKS) and possibly combining it with local peer Neiman Marcus Group Inc, Bloomberg reported today, citing people in the know.
One of the sources told the news agency that it was not sure whether the plan would result in a deal.
Knowledgeable people said earlier this month that Saks and Neiman Marcus had appointed Goldman Sachs Group Inc (NYSE:GS) and Credit Suisse Group AG (VTX:CSGN) respectively to study strategic alternatives, including their sale, Bloomberg said. According to one of the sources, the targeted price for Neiman Marcus could be around USD8bn (EUR6.2bn).
A possible tie-up would form the second largest retail store chain in the US with annual revenues of over USD7bn, after Nordstrom Inc (NYSE:JWN). It will also help the two companies trim costs by closing down duplicate stores located in the same shopping centres, one of the sources said.
Michael Appel, founder of retail consulting firm Appel Associates LLC, told Bloomberg that a possible merger would lead to many operating advantages. On the other hand, it could be impeded by complications related to landlord leases and difficulties arising from the differentiation of brands, Steven Dennis, founder of Dallas-based SageBerry Consulting LLC, said, as cited by the agency.