Canada Pension Plan, Ares to buy Neiman Marcus for $6 billion

Ares Management LLC and the Canada Pension Plan Investment Board said on Monday they had reached a deal to buy U.S. luxury retailer Neiman Marcus Inc for $6 billion from a group of investors led by private equity firms TPG Capital LP and Warburg Pincus LLC.

The Dallas-based retailer, which operates 41 namesake department stores, Bergdorf Goodman and the lower-price outlet Last Call chain, was taken private by TPG and Warburg Pincus in 2005 for $5.1 billion.

A portion of the $6 billion price will be used to pay down amounts outstanding on Neiman's credit facilities. The buyers said they expected the deal to close in the fourth quarter.

David Kaplan, co-head of Ares' private equity group, said in a statement that the firm shared Neiman's vision and praised the retailer's chief executive officer, Karen Katz.

CPPIB's Andrea Bourbonnais said the fund was drawn in part by the expectation of an increase in U.S. luxury spending.

Neiman's revenue fell dramatically in 2008 because of the financial crisis, but returned to pre-crisis levels this year. It rose 6.5 percent to $4.5 billion in the 12 months ended April 27.

Neiman registered for an initial public offering in July after earlier talks with potential buyers, including sovereign wealth funds, failed to meet the price expectations of its private equity owners, people familiar with the matter told Reuters at the time.