July 3 (Reuters) - The parent of Saks Fifth Avenue

agreed to buy rival Neiman Marcus, a person familiar with the

matter told Reuters on Wednesday, a move that is expected to

give the struggling luxury retailers more power to negotiate

with vendors.

Amazon ( AMZN ) and Salesforce will take minority stakes in the

combined company, to be called Saks Global, and offer their

technological expertise, said the Wall Street Journal, which

reported the $2.65 billion deal earlier in the day.

The deal comes at a time when luxury retailers are grappling

with slowing demand, a far cry from the boom seen after

pandemic-related restrictions eased in 2022, as U.S. customers

have become more cautious about high-end purchases.

The boards of Saks parent HBC and Neiman Marcus have

approved the transaction, and an announcement could come as soon

as this evening, the WSJ report said, adding that Marc Metrick,

CEO of Saks's e-commerce business, will run the combined

company.

Although the merger gives the combined high-end retail

entity stronger negotiating power with small luxury brands, the

chain would not match the heft and power of the global luxury

conglomerates, which will still hold most of the cards, said

Neil Saunders, managing director at retail consultancy

GlobalData.

"There is a risk that the deal might end up creating an even

bigger headache for Saks," Saunders added.

The most coveted high-end brands such as LVMH have

their own robust store networks.

Saks Global will have Salesforce assist it with the adoption

of artificial intelligence, and Amazon ( AMZN ) provide its technology

and logistical expertise, deepening their existing partnership

with Saks, the WSJ report said.

Amazon ( AMZN ) and HBC declined to comment, while Saks Fifth Avenue,

Salesforce and Neiman Marcus did not immediately respond to

Reuters requests for comments.

Neiman Marcus has been in the red since it emerged from

bankruptcy in 2020. It was one of the high-profile collapses

among retailers forced to temporarily close stores in response

to the COVID-19 pandemic.

AMAZON'S ( AMZN ) FORAY INTO THE LUXURY WORLD

A minority stake in the combined company sets up Amazon ( AMZN ) to

gain a foothold in the luxury market that has seen a steady

demand from a higher-income consumer base.

"Amazon ( AMZN ) taking a stake in the business would make sense, as

it has ambitions to play more heavily in the luxury space and

this would give it a toehold," Saunders said.

The Wall Street Journal said there were no plans to close

stores after the deal is completed. There are 39 Saks Fifth

Avenue stores and 95 Saks Off 5th discount stores. Saks.com

operates as a separate business that is owned by HBC.

Neiman has 36 department stores, two Bergdorf Goodman stores

and five Last Call discount stores. There are eight malls that

have both a Saks Fifth Avenue and Neiman Marcus store, according

to Green Street, a real-estate research firm.

"Amazon ( AMZN ) has also been interested in luxury trying to get

more luxury on Amazon's ( AMZN ) website ... always looking for

opportunities to get involved in different types of retail ...

even more physical based retail like we have here with Saks and

Neiman Marcus," Morningstar analyst David Swartz said.

HBC is financing the deal with $2 billion it raised from

existing investors, the report said.

Existing investors include Rhone Capital, the Abu Dhabi

Investment Council and NRDC Equity Partners, a private-equity

firm run by Richard Baker, HBC's executive chairman, and his son

Jack Baker. Apollo Global Management APO is providing $1.15

billion in debt financing.

Richard Baker and his son Jack Baker were not immediately

available for comment.