Canada Pension Plan Acquires U.S. Luxury Retailer Neiman Marcus for $6B

Expect Canadian pensioners shopping at U.S. luxury retailer Neiman Marcus becoming the thing. On Monday, the Canada Pension Plan Investment Board (CPPIB) announced it has bought the luxury department store chain for $6 billion, sharing equal ownership with Ares Management LLC.

The deal covers 41 Neiman Marcus stores, as well as two Manhattan-based Bergdorf Goodman stores and 36 discount Neiman Marcus outlets named Last Call. The company's online divisions operating the e-businesses are likewise included.

"This is an excellent opportunity to invest in a leading omni-channel luxury retailer, operating two of the most iconic retail brands in the U.S.," André Bourbonnais, senior vice president of private investments at CPPIB, said.

The management team of Dallas-based Neiman will retain a controlling minority interest in the business, while the rest of the controlling stake will be equally divided between CPPIB and Ares. Karen Katz will remain at the helm of Neiman Marcus as CEO.

"If you look at where we are in the cycle, it's a good time to buy this business," Mr Bourbonnais said. "People feel more and more confident about the recovery in the U.S. and the sustainability of that recovery."

Neiman recorded its 2012 sales at about $4.5 billion and Mr Bourbonnais this could go higher, which ultimately will help CPPIB build and strengthen its existing business.

"The operation is very well run, so I don't think you can squeeze out a lot of new productivity," Steven Dennis, a former Neiman executive, told Bloomberg. "The question is how do you get more things out of the core business and are there other things that could create new growth platforms for them? That's not obvious to me."

Heavily invested in holdings around the world, CPPIB has interests in a myriad of businesses such as retail spaces to development firms and car racing. These include California-based chain 99 Cents Only and Formula One. CPPIB also has 50 per cent share into the office tower of Samsung Electronics Co. Ltd. in Seoul's Gangnam district.

Neiman has said that some of the $6 billion cash will be spent to pay down debt.