The parent company of Saks Fifth Avenue has reportedly agreed to acquire its rival Neiman Marcus for $2.65 billion. The deal, which is expected to be announced imminently, will see the involvement of Amazon.com Inc. ( AMZN ) .

What Happened: The acquisition, which has been approved by the boards of both companies, will result in the creation of a luxury retail powerhouse, reported The Wall Street Journal, citing people familiar with the matter.

The deal is being financed by HBC, the holding company that purchased Saks in 2013. Amazon ( AMZN ) will take a minority stake in the new entity, to be named Saks Global, and provide it with technological and logistical support. Another minority shareholder is Salesforce Inc ( CRM ) .

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The combined company is expected to have annual sales of around $10 billion. Saks already has a business relationship with both Amazon ( AMZN ) and Salesforce ( CRM ), which the deal will further strengthen.

Luxury behemoth LVMH Moët Hennessy Louis Vuitton, owner of Louis Vuitton and numerous other brands, achieved sales of approximately $94 billion last year.

Saks Fifth Avenue, Neiman Marcus, and Amazon ( AMZN ) did not immediately respond to Benzinga's request for comment.

Why It Matters: The acquisition is a significant development in the luxury retail sector, which has been facing challenges due to changing consumer behavior and the rise of direct-to-consumer sales by fashion brands.

Both Saks and Neiman Marcus have been struggling in recent years, with Neiman Marcus even filing for bankruptcy in 2020. The deal is seen as a strategic move to strengthen the companies’ positions in the face of these challenges.

This acquisition comes after Neiman Marcus rejected a $3 billion takeover bid from Saks in 2023. The two companies have been in negotiations for a potential merger for years, and this deal is a culmination of those efforts.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote