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The Saks-Neiman Marcus merger appears to have been OK’ed by the U.S. Department of Justice by virtue of its review period expiring and no objections to the deal emerging, according to sources familiar with the situation.
HBC, the parent corporation of Saks, declined to comment.
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The government has been reviewing the deal revealed July 4 by HBC to purchase the Neiman Marcus Group for a total enterprise value of $2.6 billion. “The period of review has expired,” said one source, who requested anonymity. “At this time, there has been no objection to closing the transaction.”
After HBC disclosed the deal, on July 19 the retailer made a presentation to the Federal Trade Commission, which would be exploring any possible restraint of trade issues. After that, either the FTC or the Department of Justice has 30 days to request a second round of information. That period expired on Monday at midnight, according to a source.
With neither the FTC nor the Department of Justice requesting additional information from HBC, that effectively green-lights the deal. It’s not clear whether the government informed HBC to proceed to close the deal, or just let the 30-day period expire without any communication. “HBC got nothing,” the source said, explaining that the government would not necessarily communicate on moving the deal forward.
It’s also unclear when the deal might close. Based on the $6 billion purchase price in 2013, and very recent speculation that the price tag on Neiman’s would exceed $3 billion, it appears that Saks, at the $2.65 billion price, is getting a good deal.
The government could have been concerned about the potential for HBC to raise prices, close stores, lay off workers and increase pressure on vendors. Recent history shows that these federal agencies have challenged transactions involving well-known businesses in other industries, such as Microsoft, Meta, American Airlines and JetBlue, but also in fashion/retail, with the FTC blocking Tapestry Inc.’s $8.5 billion deal to buy Capri Holdings — which would create an accessible handbag giant with Tapestry’s Coach and Kate Spade and Capri’s Michael Kors. The FTC argued that consumers will lose the benefit of head-to-head competition on price, discounts and promotions, innovation, design and marketing if that deal goes through. Sources indicate that there has been a lot of back and forth between the government and Tapestry.