A bid for Saks is in store

By GEOFF FOSTER FOR MAILONLINE
Updated: 17:42 EST, 30 August 2010

There is more than £150billion of private equity cash sloshing about in the system, according to best estimates, and it has to go somewhere.

Private equity barons only get paid when the money is out of the door and so mouthwatering acquisitions, big and small, are definitely on the agenda for the coming months.

Merger and acquisition gurus are scouring the globe for targets.

Bid target: Saks, the owner of Saks Fifth Avenue, has been successful in luring back clients

Rumours emanating from Manhattan suggest a private equity consortium, comprising both US and UK players, has for months been stalking Saks Inc, which owns Saks Fifth Avenue, one of the most prestigious US retailing chains.

Due diligence is said to be almost complete and a cash bid of $1.7billion (£1.1billion), or $11 a share, could be tabled soon. Saks yesterday traded below $7 on Wall Street.

Saks recently posted better-than-expected quarterly results, helped by a rise in luxury spending.

It has been successful in luring back customers who turned frugal during the economic crisis in 2008, despite Saks offering deep discounts to clear merchandise.

A possible stumbling block for any bidder is the fact that billionaires Carlos Slim and Tod's Spa investor Diego Della Valle between them hold a big chunk of the equity. They will want top dollar for their shares.

Saks was once owned by British American Tobacco but the global giant was forced to sell the business in 1989 as part of its strategy to fend off a hostile bid led by Sir James Goldsmith, the Anglo-French financier.