An Icelandic investor who has expressed interest in buying luxury retailer Saks is unlikely to pursue a bid this year, sources told The Post.
Jon Asgeir Johannesson – chairman of Baugur Group, a retail conglomerate based in Iceland – said last month he was “actively” interested in purchasing Saks, adding his firm has amassed a war chest for acquisitions following recent unit sales.
The comments came despite a worse-than-expected quarterly loss at Saks, reported a day earlier, as the upscale chain noted even the richest among its well-heeled shoppers have curbed spending.
The Johannesson comments helped give shares, which had dropped below $10, a one-day lift of 5 percent and they since have risen to $11.27.
A source close to Johannesson said tight credit markets and a poor economic outlook have made the financing all but impossible at current prices.
In particular, a recent cut in Saks’ forecast for earnings before interest, taxes, depreciation and amortization, or Ebitda, has eliminated potential returns on a leveraged buy, the source said.
Investors have speculated that Saks shares, which have traded in the $9 to $23 range during the past year, might be vulnerable to a takeover offer this fall, when business is expected to be slow. They said a clearer post-holiday outlook might boost the shares beyond reach, motivating a bidder to act sooner rather than later.
While that scenario isn’t out of the question, the uncertain economic outlook has dimmed prospects. But the calculus changes if Saks shares become oversold in the coming months as Wall Street grows increasingly skittish about the holiday-shopping season.
“If the stock’s dirt cheap, they [potential acquirers] probably do have deep enough pockets to buy the company, even in bad financing markets,” said one source close to the situation.