Three Bidders Emerge for Saks Inc.; Deal Pending?

Saks Fifth Avenue flagship

Saks Fifth Avenue flagship

New York—Shares of Saks Inc. rose in trading today as speculation escalated about potential rival suitors to buy the retailer.

In May, Saks reportedly hired Goldman Sachs Group Inc. to advise on selling the company. The New York Post has reported that Starwood Capital Group LLC, a real estate investment firm headed by Barry Sternlicht, supposedly offered $17 and $18 a share for the parent of Saks and Off 5th. That’s purportedly in line with another bid from Hudson Bay Company.

The newspaper cited an unidentified source and said a Middle Eastern sovereign wealth fund may be a third bidder.

Saks posted $3.15 billion in revenue last year, below the $3.28 billion for the retail year ended in early 2008

In May Michael Binetti, analyst at UBS, said that Saks could fetch at least $16 a share if bought, giving the retailer a value of $2.4 billion, some 8.5 times great than its earnings before interest, taxes, depreciation and amortization.

Meanwhile, David Kuntz, analysts at Standard & Poors Rating Services, wrote in a research report, “In our view, it is likely that U.S. department store Saks will be acquired.”

Should that occur, Standard & Poor’s will probably downgrade the company’s ratings since its credit profit could weaken due to increased debt.

The rating agency current rates Saks Inc. at double-B and expects to decide about a downgrade in the next three months.

 

 

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Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com