By  on October 30, 2007

Amid mounting speculation, the Icelandic investment firm Baugur Group confirmed Monday that it wants to acquire Saks Inc. — possibly with a partner.

Baugur, the second-largest investor in Saks, said in a filing with the Securities and Exchange Commission that it "expects to seek to engage in discussions" with the management of the luxury retailer.

In addition, Baugur said it might make a joint bid for Saks with Milestone Resources Group Ltd., which Baugur referred to in the SEC papers as the Landmark Group. The Dubai-owned Landmark Group, which owns shares of Saks, already has had "exploratory discussions" with Baugur, the filing said.

WWD reported this month that Saks had changed position on whether it would agree to discuss being acquired. In previous years, the luxury retailer said it wasn't interested and was focused on a turnaround of the chain.

Financial and industry sources said earlier this month that the $2.9 billion Saks had been approached by at least one entity trying to float the idea of an acquisition. At the time, a Saks spokeswoman declined comment.

Baugur Group has been the leading contender to make an offer for Saks, but experts don't expect one until at least after the holiday season. A negotiation for a sale now would be disruptive to the retailer during the crucial holiday sales season. And Wall Street sources said both sides will want to see how this key revenue period plays out.

Baugur took an 8.1 percent stake in Saks in July to become the company's second-largest investor. The largest shareholder is Mexican billionaire Carlos Slim Helu who, with other family members and through Immobiliaria Carso SA De CV, owns almost 13.3 million shares, or a 9.3 percent stake.

Baugur has made no secret of its desire to enter the U.S. market. The investment group already has a U.S. presence through Mosaic Fashions, a holding company for Karen Millen stores in Atlanta, Boston and Los Angeles. Baugur is believed to be considering an offer for Saks worth between $26 and $30 a share, or about $3.7 billion to $4.3 billion. Saks' debt at the end of the last quarter was $575.4 million, making it even more attractive to a potential buyer.Shares of Saks closed at $19.79, up 2.7 percent, in trading Monday on the New York Stock Exchange. After the disclosure of Baugur's interest, shares of Saks rose at least another 9 percent in after-hours trading to $21.60.

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