Tags: Saks | Shares | Surge | Report | Buyout | Bid

Saks Shares Surge After Report of Buyout Bid

Tuesday, 31 Aug 2010 12:36 PM

Saks Inc. shares surged over 21 percent on Tuesday after a news report suggested that a group of private equity firms might soon bid for the New York-based luxury department store operator.

The Daily Mail, a British newspaper, said that a consortium of U.S. and British firms could make a cash offer of $11 per share, or $1.7 billion in all, for the company. The report did not cite sources or which firms might proffer a bid.

Saks shares were trading at $8.02 in morning dealings, up 21.5 percent but well short of a recent high of $10.65 reached in April. Prior to the report, the company had a market value of $1.06 billion.

A Saks spokeswoman said in an email that the company does not comment on rumors or speculation.

The chain, known for its flagship store on Manhattan's Fifth Avenue, has been the object of repeated takeover speculation in recent years, with media reports saying potential bidders included buyout firms Cerberus Capital Management and Britain's Permira. Its shares have languished with doubts about the pace of a U.S. economic recovery, though it says its core clientele of wealthy customers is still shopping its merchandise.

Nearly nine months ago, Saks removed a "poison pill" aimed at averting a potential hostile takeover by Mexican billionaire Carlos Slim. Slim had rapidly raised his stake as shares fell below $3 in November 2008 during the global financial crisis.

Slim now holds a 15.9 percent stake in Saks, making him its largest shareholder. The next largest shareholder is Italian businessman Diego Della Valle, who nearly doubled his stake in Saks in a matter of days in March to 9.3 percent.

Bahrain investment group Investcorp SA took Saks public in 1996, when shares were priced at $25.

If Saks were to go private, it would follow in the footsteps of rival upscale department store operator Neiman Marcus Group Inc., which was bought by an investor group led by buyout firms TPG Capital and Warburg Pincus in October 2005.

Another luxury rival, Barneys New York, is also privately held. It was bought by Dubai World unit Istithmar for $942 million from Jones Apparel Group in 2007.

After stumbling during the economic slowdown as consumers cut back on luxury items, Saks's sales have rebounded. Last week, the company reported better-than-expected results as it sold more items at full price.

Sales in July at its stores open at least a year rose 6.4 percent, beating Wall Street estimates.

Saks, founded in New York City in 1919, operates exclusively in the United States and runs 50 full service Saks Fifth Avenue stores and 55 Off 5th outlet stores.

© 2017 Thomson/Reuters. All rights reserved.

 
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Saks Inc. shares surged over 21 percent on Tuesday after a news report suggested that a group of private equity firms might soon bid for the New York-based luxury department store operator. The Daily Mail, a British newspaper, said that a consortium of U.S. and British...
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2010-36-31
Tuesday, 31 Aug 2010 12:36 PM
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