Lord & Taylor Parent Hudson's Bay Wants To Buy Saks

Saks (NYSE:SKS) may finally have found a buyer. The luxury chain, which has been on the market for a year, is now in the sights of Hudson's Bay Co., The New York Times reported on Monday (June 24).

No one involved in any potential deal has gone on the record to confirm it. The Times quoted sources briefed on the matter and said Hudson's Bay has been eying Saks for several months. Saks has a market cap of about $2 billion, but analysts said a buyout could fetch $2.5 billion or more.

A Hudson's Bay buyout of Saks would open the possibility of a Saks expansion in Canada. It could also create an interesting situation in the U.S., where Hudson's Bay also owns the Lord & Taylor chain. Both chains have flagship stores on New York's Fifth Avenue, 11 blocks from each other.

The two luxury chains each have 40-odd nameplate stores, in some cities competing directly against each other. However, Saks also operates 65 Off 5th stores, which makes it the more likely nameplate to survive a merger. Saks also operates stores in Mexico, Saudi Arabia, Bahrain, United Arab Emirates and Kazakhstan.

Keeping the two chains running separately seems the most unlikely scenario, since Hudson's Bay is controlled by U.S. shopping mall developer Richard A. Baker, who hasn't hesitated to sell off or lease away real estate to pay down acquisition debts. It was Baker who shut down Canadian discount chain Zellers and subleased its stores to Target (NYSE:TGT), making it possible for that chain to open 105 stores north of the border starting this year.

For more:

- See this New York Times story
- See this Canadian Press story

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