It’s official: Saks Fifth Avenue has found a new owner.
Confirming The Post’s exclusive report late yesterday, the New York-based retailer said it has been acquired by Hudson’s Bay, the Canada-based owner of Lord & Taylor, saying it has agreed to a price of $16 a share, valuing Saks at $2.9 billion including the assumption of debt.
The deal is a 30 percent premium to Saks’ closing stock price on May 20, the day before The Post exclusively reported the company had hired Goldman Sachs to explore a possible sale, Saks CEO Steve Sadove noted in a written statement Monday.
It’s also at the high end of initial bids submitted for Saks, according to sources. Those were in the $15 to $16 range, above a bidding floor of $15 that had been set by Goldman Sachs, which was hired to lead the sale process this spring, insiders said.
“We believe this transaction delivers compelling value to our shareholders and that Saks Fifth Avenue is an excellent fit within the HBC organization,” Sadove said, referring to Hudson’s Bay Company, the oldest continually running business in North America, which began in Canada in 1670 as a fur-trading enterprise.
Still, it’s a premium of just 4.5 percent to Saks’ Friday closing price of $15.31, well short of the $17 to $18 range some insiders had speculated would be required to get a deal done.
That may be an indication that the auction was less robust that some anticipated. As reported by The Post, the process was narrowed down to three bidders this month. One of them, real-estate titan Barry Sternlicht, pulled out after his private-equity bidding partner Catterton Partners got cold feet, sources said.
The third bidder was believed to be a Middle Eastern sovereign-wealth fund, possibly from Qatar, but the level of its interest had been difficult to gauge, according to sources.
That’s a confirmation of the shrewd dealmaking habits of Richard Baker, the savvy New York property mogul who bought Hudson’s Bay in 2008 after acquiring Lord & Taylor three years earlier.
The pitch, according to insiders, is that Saks shareholders are poised to participate in significant gains through the merger. Hudson’s Bay said it expects to reap more than $100 million in cost savings as it combines with Saks over the next three years.
Also, Hudson’s Bay confirmed speculation that it will establish a real-estate investment trust to hold the combined properties owned by the two companies. Under that strategy, the companies’ real estate is likely to command a significantly higher valuation, according to experts.
“This exciting portfolio of three iconic brands creates one of North America’s premier fashion retailers,” Baker said in a statement. “This acquisition will increase our growth potential both in the U.S. and Canada, generate significant efficiencies of scale, add to our powerful real estate portfolio and deliver substantial value to our shareholders.”
Saks will operate separately under its corporate umbrella, keeping its own merchandising, marketing and store operations teams, and will remain headquartered in New York City.
While Saks CEO Sadove is expected to step down, Hudson’s Bay said Saks will continue to be led by key members of its existing management team. Hudson’s Bay didn’t say which, but senior Saks execs include president Ron Frasch, a former Bergdorf Goodman exec credited with bringing more exclusive, top-tier luxury brands to Saks during the past decade.
In a written statement this morning, the companies said the agreement will allow Saks a 40-day “go-shop” period during which it can solicit higher bids.
Saks shares in early premarket trading were recently at $15.90, up just 4 percent, tentatively indicating that Wall Street may find $16 a share palatable under current market conditions.
“If this deal falls apart, Saks is fairly valued at $10 a share,” one veteran investor in retail stocks told The Post. “The fundamentals of the company and this industry aren’t all that great right now.”