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Saks Fifth Avenue’s new owner is poised to solve the luxury chain’s biggest problem: Most Saks stores are a long way from Fifth Avenue.
The 115-year old retailer, confirming The Post’s exclusive report late Sunday, announced yesterday it has agreed to be acquired by the Canada-based owner of Lord & Taylor for $2.4 billion in cash.
A big chunk of that outlay goes toward the acquisition of Saks’ giant flagship store on Fifth Avenue, next door to St. Patrick’s Cathedral, which, according to some analysts, may be worth as much as $1 billion.
Beyond that, however, experts say the quality of Saks’ real-estate holdings quickly drops, with only about a half-dozen of the chain’s 41 locations that would be considered top tier.
That’s because Saks execs went on an ill-advised expansion binge in the late 1990s, opening a slew of stores in iffy locations such as Fort Lauderdale, Fla.; Portland, Ore., and Dallas — the backyard of archrival Neiman Marcus.
Saks CEO Steve Sadove, who insiders say is expected to leave the company following the close of the acquisition, won praise in recent years for aggressively exiting laggard locations.
Richard Baker, CEO of Hudson’s Bay, which acquired Lord & Taylor in 2008, told The Post combining the two US retailer brands will allow Saks to exit still more less-desirable locations — namely, by replacing them with L&T.
“There’s a huge opportunity there,” Baker told The Post, declining to give specifics on his plans.
The deal, which promises nearly $100 million in cost savings over the next three years, works in the opposite direction, too.
Baker sees the potential to open seven Saks Fifth Avenue stores in Canada at locations currently occupied by his company’s midtier namesake stores, The Bay.
The move is a direct response to Nordstrom, which announced plans to open several stores in Canada beginning next year.
Hudson’s Bay’s offer for Saks of $16 a share represents a 30-percent premium to Saks’ closing stock price on May 20, the day before The Post exclusively reported it hired Goldman Sachs to explore a possible sale.
Still, it’s just 4.5 percent higher than Saks’ Friday closing price of $15.31, well short of the $17 to $18 range some insiders had speculated would be required to get the deal done.
That may be an indication that the auction was less robust than expected.
As reported by The Post, the sales process had three bidders in its final stage. One, real-estate titan Barry Sternlicht, pulled out after his private-equity bidding partner, Catterton Partners, got cold feet, sources said.
The level of interest from the second, believed to be a Middle Eastern sovereign-wealth fund, possibly from Qatar, had been difficult to gauge, according to sources.
Hudson’s Bay and Saks said the agreement will allow Saks a 40-day “go-shop” period during which it can solicit higher bids.
Saks shares yesterday rose 4.2 percent to $15.95 — an indication that some investors expect Hudson’s Bay may have to raise its offer.