TheChek News Flow

The Saks Fifth Avenue store in Palm Beach, Fla. is expected to close next year.

As Saks Fifth Avenue parent HBC inches closer to its deal to buy Neiman Marcus Group, it is taking a close look at its own store portfolio and is said to be closing its Palm Beach, Fla. store.

But overall, the Saks world is set to get much bigger.

According to sources, HBC has secured a $2 billion-plus junk bond this week that puts the company firmly on track to close its deal to buy the Neiman Marcus Group.

HBC declined to comment on both reports Wednesday.

Saks’ store on Worth Avenue in Palm Beach is among the luxury chain’s oldest stores, having opened in 1926, just two years after the Saks Fifth Avenue flagship opened in Manhattan. The location is expected to close next year.

Saks Palm Beach is said to be in need of upgrades, which Saks has apparently decided not to do. While the main floor has held up over the years, particularly with a popular footwear and beauty area, the upstairs level for women’s sportswear has needed an overhaul. Saks continues to operate its store in Palm Beach Gardens, which is about 13 miles from Palm Beach.

Neiman Marcus closed its nearby store on Worth Avenue several years ago.

Last July, the Richard Baker-led HBC reached a definitive agreement to buy the Neiman Marcus Group for a total enterprise value of $2.65 billion. The transaction could close in a matter of weeks and would bring Saks Fifth Avenue, Saks Off 5th, Neiman Marcus and Bergdorf Goodman under the Saks Global umbrella.

The Saks-Neiman Marcus merger cleared a key hurdle in August when the Federal Trade Commission decided to let the deal go through without a second request for more information.

WWD reported on Nov. 27 that HBC was working with Jefferies Financial Group on a bond and that it was being well received.

Bloomberg reported Wednesday that a $2.2 billion junk bond financing the acquisition saw strong demand. The bond market is currently strong and attracting investors with high yields on long-term debt. Bloomberg also reported that HBC boosted the bond by $200 million.

According to Baker, HBC’s executive chairman and chief executive officer, Saks Global is on track to generate $10 billion in sales, with Saks accounting for about $6 billion in sales and Neiman’s, $4 billion.

Based on very recent speculation that the price tag on Neiman’s would exceed $3 billion, it appears that HBC, at the $2.65 billion price, is getting a good deal. Amazon is an investor in the deal, as is private equity giant Apollo as well as Salesforce. HBC secured a $1.15 billion term loan in financing from investment funds and accounts managed by affiliates of Apollo.

Authentic Brands Group plans to make a minority investment in Saks Global after the Saks deal to acquire Neiman Marcus Group closes. Saks and Authentic have formed a venture to grow luxury brands, called Authentic Luxury Group, which the principles in the partnership said will initially focus on Authentic Brands-owned luxury and accessible luxury names, including Barneys New York, Judith Leiber Couture, Hervé Léger and Vince.

One source told WWD that other undisclosed entities are involved in the deal.

Closing the deal would be good news for vendors, considering Saks has been delinquent on payments. Multiple sources say it continues to be slow in paying vendors. In August, a rare conference call between Baker; Marc Metrick, CEO of Saks Global, and Jennifer Bewley, chief financial officer of HBC, provided updates to Saks and Saks Off 5th vendors. While apologetic about how vendors have been treated, the executives urged them to stick with Saks and Saks Off 5th, and expressed extreme confidence that the deal to buy the Neiman Marcus Group would soon close, ultimately benefiting — and not hurting — them.

The executives said at the time that new financing and equity infusions through the deal, future property sales and fall 2024 selling would improve liquidity, helping them to catch up on outstanding payments to vendors, many months past the average 60-day period. At the same time, however, a merger would enable HBC to exert greater buying clout over vendors.

Junior bondholders to mount a rival plan as utility asks judge to sign off on restructuring

A court ruling that rejected an attempt to overhaul the family trust leaves Rupert Murdoch and his children at odds

This autumn’s dramatic courtroom battle might have been expected to settle the family drama once and for all.

Rupert Murdoch, 93, flanked by lawyers and his fifth wife, showed up in Reno, Nevada, in September to fight three of his children over control of his assets when he dies. It made for a television-worthy finale to decades of disputes and changing allegiances within the family.

Instead, this week’s ruling from a Nevada probate court has left the fate of the Murdoch empire more vexed and uncertain than ever. A probate commissioner flatly struck down Rupert’s attempt to amend an irrevocable family trust and consolidate power around his son Lachlan Murdoch. Rupert is expected to appeal against the decision.

The outcome has created a bitter stalemate between the warring factions of the Murdoch clan, said several people close to the situation.

The dispute centres around a trust established in 1998 stipulating that when Rupert Murdoch dies, control over the family’s assets will be split evenly among four of his children: Lachlan, James, Elisabeth and Prudence. The four siblings would decide what to do with the family’s global television, newspaper, book publishing, streaming and real estate empire, holdings that are combined worth nearly $40bn on the public stock market.

Despite a chilling in relations between James Murdoch and his father in recent years, he and his sisters had expected that upon Rupert’s death there would be a “reasonable discussion” about how to divide up the assets and who might run them, said people familiar with the matter.

However, Rupert’s move — which blindsided the other children — created a “lot of bad blood”, said a person close to James.

The situation has devolved into a “family feud”, the person said, adding that James “doesn’t have a plan”. Instead, the feeling is: “I don’t know what I want, but I don’t want the other one to take it,” the person said.

Rupert Murdoch moved to cement power for Lachlan in part because he feared his other children would shift the business from its core conservative image, said people familiar with the case. James in particular has been critical of Fox News in the US. But this was a “false narrative”, said one person familiar with the siblings’ thinking.

The person close to James shot down speculation that the more liberal-minded Murdoch son might try to take over Fox News and tilt its politics after his father dies.

“He doesn’t want to be the guy who presides over Fox News. He’s smart enough to know that if he repositions Fox News it’s as good as dead. Because the power of Fox News comes from the ideological position that it has.”

However, James would “want fair value for [Fox]”, the person added. Fox Corp is valued at more than $20bn on the stock market.

The other major asset at stake is News Corp, the owner of newspapers including Wall Street Journal and the Sunday Times and book publisher HarperCollins. The total Murdoch family fortune is worth more than $6bn. The trust controls about 40 per cent of the voting stakes in Fox and News Corp, and a 17 per cent economic interest in each of the companies.

The family chaos has left bankers and analysts speculating over whether Rupert Murdoch might opt to sell his assets before he dies, to avoid leaving them to his feuding children.

Rich Greenfield, analyst at LightShed, said: “We believe there is a near zero per cent chance that Rupert wants to leave planet earth with the future of the assets he spent his life building left in limbo.”

He predicted the situation will be resolved in one of two ways. The first would be for Lachlan to raise capital in order to buy out his three siblings, which would likely prove expensive because of the “control premium”.

If Lachlan is unable to strike a buyout deal, the other path is to auction off the assets. “Could Elon Musk buy Fox News for north of $20bn? Not such a crazy idea,” Greenfield said.

One person familiar with the court ruling said Rupert and Lachlan Murdoch “are not expected to give up”.

“Could they try to buy out the siblings? That’s been tried before. I think they are trying to work out how they achieve their goal by different means. It’s all still to play out.”

Greenfield said he expects Murdoch would want to sell his businesses after Donald Trump takes office for “easier regulatory approval” by a more business-friendly administration.

Claire Enders, media analyst at Enders Analysis, said there have been repeated attempts to buy James’ stake in the trust over the past six years, but no deal had ever been acceptable to both sides. But Rupert is “not a man who gives up”, she added.

Shareholders are worried the rifts in the family trust will lead to instability over future direction of the business. Activist investor Starboard Value argued earlier this year that the four Murdoch siblings “are reported to have widely differing world views, which, collectively, could be paralysing to the strategic direction of [News Corp]”.

The Murdoch children are still expected to extend an olive branch to their father despite the anger caused by his attempted coup, said people familiar with the matter.

“This has always been about protecting the rights as established under the trust. Now it is about restoring some harmony, or as much as possible,” said one person close to the group. “The three siblings want to put this behind them.”

Enders expected Elisabeth would lead efforts to reach a détente between the two sides: “She is believed to have taken the lead in previous disputes and crises requiring conciliation efforts between her father and his children.”

However, those close to the situation say that while families often use Christmas as a time to get together, the chances of the Murdochs gathering around the tree this year appear vanishingly small.

Discussions come as government seeks to meet 2030 clean power target

UK ministers are drawing up plans for the country’s biggest ever renewable energy subsidy auction as they attempt to hit their challenging clean power target, according to government figures.

Energy secretary Ed Miliband is due to launch a “Clean Power 2030 Action Plan” on Friday, which will set out how the government aims to decarbonise the electricity system by the end of the decade. Last week Prime Minister Sir Keir Starmer named it as one of his “milestone” targets. 

The UK subsidises low-carbon electricity projects through “contracts for difference”, where the government guarantees developers a fixed price for the electricity they generate — typically over 15 years — funded via a levy on consumer bills.

In September the new Labour administration announced the results of a CFD auction that secured funding for a record 131 clean energy projects, covering 9.6 gigawatts of energy capacity, capable of powering 11mn homes.

It came after a botched auction round in 2023 under the previous Conservative government in which no offshore wind developers bid because the subsidies on offer were not generous enough to cover rising costs.

Ministers are discussing holding the biggest auction yet in 2025 in a bid to hit the 2030 “clean power” target, which consists of at least 95 per cent low carbon electricity, and gas-fired stations stepping in when renewables output slumps.

“When you think about the long lead times for a project like an offshore wind farm it makes sense to get going with the CFDs now and throw the book at this with a huge auction round as soon as possible, probably next year,” said one government figure. “It would be the biggest we’ve seen so far.”

Such a move could be controversial given heightened scrutiny on energy bills. Developers have to pay consumers back if the wholesale price is higher than the fixed price agreed at auction.

Miliband has said his plans can bring bills down by up to £300 in 2030, although many critics have questioned this claim.

The budget for September’s auction round was set at £1.56bn per year, but how much the projects will actually cost depends on wholesale electricity prices once they are up and running.

Labour’s 2030 target requires a huge boost in the rollout of renewable energy projects such as onshore and offshore wind and solar power, as well as the cables and pylons needed to transfer electricity.

It will also mean prolonging the life of some existing nuclear power stations to keep a supply of regular “baseload” power, which is not subject to changes in weather.

In a report last month, the National Energy System Operator, which was spun out of National Grid this year, set out potential pathways to the 2030 target.

The state-owned entity suggested that companies and households would have to be more flexible about when they used electricity, with households charging electric cars or using washing machines at night, for example, when demand — and prices — are lower.

Under Neso’s modelling, in order for the 2030 target to be met, Britain’s offshore wind capacity would have to jump from 15GW to 43GW-50GW by 2030, while onshore wind would have to rise from 14GW to 27GW and solar would need to treble from 15GW to 47GW.

One person familiar with the discussions said that having a big CFD auction next year was an “obvious conclusion of the Neso report”, given the need for the rapid rollout of green energy.

Britain would maintain up to 4.1GW of nuclear power in 2030, partly from the Sizewell B nuclear power station in Suffolk and by extending the life of at least one other existing station.

The Department for Energy Security and Net Zero did not immediately respond to a request for comment.

Head of Central Group family conglomerate says higher global interest rates make original £4bn price tag less attractive

One of Thailand’s richest families believes it overpaid for its acquisition of Selfridges and a handful of other luxury department stores in Europe as part of a £4bn deal in 2021.

Tos Chirathivat, executive chair and chief executive of family conglomerate Central Group, whose operations span retail, hospitality and real estate, told the Financial Times the price was “high” in hindsight, given increased interest rates globally.

Speaking in his first interview since buying the premium department stores, he added: “You would want the lowest price possible to buy something . . . is £4bn high? Yes, it’s high, especially in this environment.”

He added: “Maybe 10 years from now it won’t be too high, but if you ask today, then of course it’s too high.”

Central, which has sought to build its European luxury stores division since the acquisition of high-end department store Rinascente in Italy in 2011, is the majority owner of lossmaking Selfridges in the UK, De Bijenkorf in the Netherlands and the Brown Thomas and Arnotts brands in Ireland.

It bought the portfolio including the world-famous Selfridges store in 2021 from the billionaire Weston family with co-investor Signa Holding, making it only the fourth time the Oxford Street outlet had changed hands since it was founded in 1909 by Harry Gordon Selfridge. 

Yet it has been far from plain sailing since then. Signa, the property empire of real estate mogul René Benko, unravelled at the end of last year in a collapse which saddled investors in Austria and Germany with billions of euros in losses. Last week Italian prosecutors issued an arrest warrant for Benko amid an investigation into alleged improprieties with his business in the South Tyrol region.

In October, Central struck a deal with Saudi Arabia’s Public Investment Fund to buy him out, with PIF now expected to own 40 per cent of Selfridges Group’s operating and property companies and Central the remainder when it completes.

Chirathivat said there had been “no issue” between Central and Signa during their years-long partnership — they went into business together after Benko sold the majority of Germany’s upmarket department store Kaufhaus des Westens, or KaDeWe, to Central in 2015.

However before Signa’s collapse, Central began to have concerns about its debt levels.

Chirathivat added that Central had no knowledge of Benko subsequently doing a deal with the PIF, which meant the Saudi group had a stake of about 10 per cent before agreeing its own deal with Central to increase this to 40 per cent. “He only told us later when it was done . . . that he sold part of it to the PIF.”

Central has spent the last 18 months “trying to clean up [the mess] because our partner [was] no longer able to continue”.

Chirathivat, whose grandfather and father immigrated from mainland China and together founded the family business in 1947, has fond memories of visiting Selfridges as a child.

“Department stores have always been in our blood,” said the 60-year-old. Central is Thailand’s biggest department store operator and the billionaire Chirathivat family is one of the country’s wealthiest. “Vacation also meant visiting stores, my dad would take me walking and look at the windows every night, whether it’s Saks Fifth Avenue, Selfridges or Harrods.”

He said after the Signa debacle Selfridges Group was now “on track” and “things are going very well”.

Cambridge Retail Group Holding, Selfridges’ holding company, recorded a pre-tax loss of £340mn in the 53 weeks to 3 February 2024, from £126mn in the same period a year earlier, partly because of a surge in its finance bill and administrative costs, although revenue jumped by 95 per cent to £1.6bn, from £804mn.

Central has enlisted André Maeder, who previously ran KaDeWe, as chief executive of the group to steady the ship and focus on investment in the flagship store on Oxford Street, although neither Maeder nor Chirathivat would say how much that would be.  

Chirathivat added: “The focus is to ‘rebuild’ the [Selfridges flagship] store . . . We have three good floors [of six] . . . we are working to improve every area, whether it’s new products, brands, services, food and beverage outlets. 

He said “the grand plan for Selfridges” was to become “the best store in the world”, admitting that currently it was probably in the “top five”.

It has installed new make-up counters to bolster its beauty offering and big luxury brands have also been increasing their floor space, Maeder added. 

“I’m happy because there’s so much potential,” Chirathivat said. “We can do a lot more.”

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