By  on June 30, 2005

NEW YORK — Preliminary bids for the Northern Department Store Group of Saks Inc. are due by the end of this week, with The Bon-Ton Stores Inc. among the probable participants, according to financial sources.

Bon-Ton, a $1.3 billion regional retailer based in York, Pa., is likely to team with a private equity firm in the bidding.

Saks Inc. could not be reached for comment.

Bon-Ton has a history of acquisitions, including its 2003 purchase of Elder-Beerman. The purchase of the Northern Department Store Group, which includes Carson Pirie Scott, Bergner's, Boston Store, Herberger's and Younkers, would be Bon-Ton's biggest.

"The Bon-Ton people have been out looking for money," said a financial source. He added that he believed the field of strategic buyers for the Northern Department Store Group would be small. Analysts have suggested J.C. Penney and Dillard's as other possible strategic bidders.

Bain Capital Partners is a private equity firm also eyeing Saks' group, as reported

Another source said Bon-Ton would not have the money to buy the Northern Department Store Group on its own.

Cerberus Capital Management is one possible partner for Bon-Ton in a bid, though the private equity firm, based here, could do it on its own. The company is due to soon close on its acquisition of Rafaella Sportswear. Cerberus already owns Mervyn's and Fila, and once considered acquiring Bill Blass. In the $1.65 billion acquisition of Mervyn's from Target Corp., Cerberus was part of a consortium that included Sun Capital Partners and Lubert-Adler/Klaff and Partners. Cerberus tends to make investments in distressed companies. Past investments were in G&G, Guilford Mills and Frederick's of Hollywood.

Bon-Ton operates 139 department stores and two furniture stores in small markets in 16 states from the Northeast to the Midwest. Stores are either called Bon-Ton or Elder-Beerman. The stores emphasize moderate to better-priced apparel, cosmetics, shoes, accessories and home goods, similar to the Saks Inc. stores, and are usually the primary department store in the market.

R. Brad Martin, chairman and chief executive officer of Saks Inc., recently told WWD that the NDSG is "quite profitable. The stores are either number one or number two in their marketplaces. In the Chicago, Milwaukee, Des Moines and Omaha markets, we're the number-one [retail department store] business, and we are a terrific emerging business in Michigan. We are the number-two business in metro Chicago," next to Marshall Field's.

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