NEW YORK — Bon-Ton Stores Inc. is making another run at buying the Saks Inc. northern department store group, according to two sources.
"The conversations are heavy. They are probably talking as we speak," a financial source said Thursday.
Earlier in the week, a retail source familiar with Saks Inc. said there could be a deal to sell off the northern group in early November.
Saks Inc. declined to comment and Bon-Ton officials could not be reached.
Saks Inc. and Bon-Ton had ceased conversations last month when they couldn't agree on price. Bon-Ton at that time was bidding on its own, although it could not be learned whether its latest effort is again a solo one. It had at one point been talking with private equity firms to partner in a deal for the northern group, but the talks supposedly fell through.
The sources speculated Saks Inc. may be backing off from insisting on $1.5 billion for the northern group. Bon Ton was said to be looking to pay less than $1 billion. The northern group consists of 30 Carson Pirie Scott stores in the Chicago area, 47 Younkers and 41 Herberger's stores in the Midwest, 14 Bergner's in Illinois and 10 Boston Stores in Wisconsin. The stores generated $2.2 billion in sales last year.
Bon-Ton, based in York, Pa., is a 139-unit regional department store chain in 16 states from the Northeast to the Midwest. The stores, called Bon-Ton and Elder-Beerman, generated $1.3 billion in sales last year.
The 56-unit Club Libby Lu tween specialty division of Saks Inc. is also up for sale.
There was some speculation the management of Carson Pirie Scott would launch a leveraged buyout of the northern group. However, as the financial source said: "The buyer has to be somebody with synergies, someone who has the systems to operate the northern group," meaning another retailer. "If there was an LBO, management would have to make huge investments, considering Saks Inc. is centralized."
There also has been speculation Saks Inc. could sell off its Saks Fifth Avenue chain, but it is believed that Saks Inc. currently wants to retain the business, at least for now, and continue turnaround efforts there. Saks Fifth Avenue is about 18 months into a turnaround plan that store officials believe will require at least three years before it is completed.
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