Which One Is Messi Or Neiman More Worthy Of Hudson 'S Acquisition?

According to the world clothing and shoe net, it is said that the Canadian Department store operator, the parent company Hudson "s Bay Co" of the US luxury goods department Saks (hereinafter referred to as HBC) has proposed a takeover offer to the Messi department store (Macy sInc).

But another insider has revealed that Richard Baker, executive chairman of HBC, has not given up buying another well-known US company.

The possibility of department store Neiman Marcus.

It is reported that smart Richard Baker has been waiting for this for many years.

HBC's current high-end retail portfolio includes: Saks Fifth Avenue, Lord&Taylor, Hudson 's Bay, German department store Kaufhof, American luxury flash shopping website Gilt, etc.

No matter what HBC chooses to buy (Messi general store, Neiman Marcus), it will produce strong synergy, such as: introducing more

Brand, get more retail talent, better retail location and so on.

The acquisition of Messi's department store means a lot of commercial real estate.

The property of Herald Square flagship store in Manhattan, New York, the real estate in Chicago State Street, and Messi's annual sales of $27 billion.

The acquisition of Neiman Marcus means that many top luxury retail chains in North America have been harvested. Among them, Bergdorf Goodman in New York is the Pearl of the group's crown.

But no matter which department store HBC purchases, there are potential drawbacks. The industry thinks that the broken business model of Messi and Neiman Marcus is in urgent need of repair. Self repair or HBC assistance will be a big problem.

Messi stores will close more than 60 stores this year, and will shut down more than 30 stores in the next few years, aiming to reverse the weakness of sales.

Neiman Marcus is now heavily indebted, with sales and passenger flows dropping sharply. But this week, another flagship store has been opened in Fort Worth, Texas.

Two department stores are now caught up in the depletion of tourism consumption.

A retail industry believes that HBC's purchase of Messi's department store is probably true, but RichardBaker needs partners to complete the paction.

Private equity funds and real estate companies are potential partners. Real estate companies have been coveted by the property of Messi's department store for a long time.

At this point, RichardBaker needs to consider how much commercial property he wants to hold.

Investors at HBC have reservations about the takeover rumours. The company's share price rose 3.9% to $7.98 per share on the Toronto Stock Exchange on Friday.

But another insider revealed that the acquisition is still in the early stage of negotiations, and HBC is still seeking more potential buyers.

HBC currently owns $14 billion worth of real estate and is fully capable of dealing with the acquisition of Messi's department store (which is similar to the Kaufhof structure of HBC's acquisition of German department store in 2015).

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Potential buyers

But HBC is not the only buyer willing to buy Messi's department store.

According to research firm Cowen&Co.'s report, three advantages of Messi's department store make it attractive:

Lower market capitalization (Friday's share price of $32.89 per share);

The value of real estate is US $15 billion ~200 billion.

Free cash flow of $2 billion 800 million

But Messi's department stores offset the advantages mentioned above because of three problems, such as lack of potential synergy, sharp reduction of passenger flow and gradual loss of market share.

According to the report, Messi's department store is in pition. The potential acquirers will face enormous resistance: there is a long lead time in the suppliers, buyer models and supply chains of Messi department stores, which means huge discount sales and overstock risks.

In addition, the continued strength of the US dollar and the possible border tax in the future will increase the risk of acquisition.

HBC's current debt and sluggish share prices may also make Messi's department more willing to buy, but the company has strong interest in the latter's property in Chicago, San Francisco and New York and its high-end department store Bloomingdale 's.

According to the report, in view of the low stock prices, HBC management does not want to raise funds through the form of capital raising and expansion to complete the acquisition.

Cowen&Co. pointed out that the real estate developers Simon Property Group, General Growth Properties and Brookfield Asset Management will be potential purchasers in Messi department store, or they are likely to form joint ventures to operate the sale / sale leaseback of Messi's department store property.

Among them, Brookfield has begun to cooperate with Messi department store to redevelop or sell back the 50 real estate of the latter.

But Messi had previously commented that "the real estate trust fund has not created enough value now."

Other strategic buyers may include: UNIQLO parent, Japan fast marketing group, fast fashion group Primark, and some other companies in the Middle East or Asia.

The report holds that overseas companies seeking tangible assets will have strong interest in Messi's department store, but there are geopolitical risks.

Cowen&Co. also mentioned the possibility of leveraged buyout and MBO, but there is a risk of increasing debt.

According to the world clothing and shoe net, Amazon, a US business giant, is also very interested in Messi's department store. The company recently focuses on physical retailing, and hopes to establish supplier cooperation through acquisition of Messi's department store.

And Messi stores will tend to be part of the strategic buyers. The company now strictly implements the following strategies: close shop plan, multi-channel development, and streamline management.

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Purchasing price forecasting

In a report, research firm Stifel Research talked about HBC's possible offer for Messi's department store.

The report predicts that the takeover price may be $40 per share, a premium of 30% compared to Messi's opening price on Friday ($30 per share).

The valuation criteria refer to the median value of the Acquisition Premium in the retail industry in recent years.

The value of Messi's department store is about $20 billion (about $65 per share), and the market value of Messi's stock at the opening of the stock market last Friday was only $10 billion (about $30 per share). Of course, the valuation of the former includes speculation on real estate speculation, perhaps too optimistic.

Stifel Research also said that Messi stores and NeimanMarcus are all highly leveraged in terms of assets and liabilities. As buyers, they will expect to release the potential real estate value of the two companies.

Therefore, it will be possible to carry out after-sale leaseback, mortgage loans, or sell property to third parties.

The report mentioned that HBC had purchased the luxury goods department Saks Fifth Avenue at a price of 2 billion 900 million US dollars, and subsequently assessed the Saks Fifth Avenue Manhattan flagship store as high as 3 billion 700 million dollars.

But whether HBC can continue to succeed in the retail industry is uncertain.

More interesting reports, please pay attention to the world clothing shoes and hats net.