By and  on November 15, 2007

While global mergers and acquisitions activity slowed down due to financing issues in the credit markets, there are at least three companies seen as targets in the fashion and retail sectors: Saks Inc., Steve Madden Ltd. and Kellwood Co.

Icelandic firm Baugur Group so far appears to be the only player chasing Saks. Pursuit of the high-end retailer quickened over the weekend when the investor hired NM Rothschild and Financo Inc. as its U.S. advisors. Baugur has declined comment beyond its regulatory filing last month. The filing said it was eyeing Saks and might pursue a joint bid with Milestone Resources Group Ltd., also known as Landmark Group. The Dubai-owned Landmark Group, which also owns shares of Saks, has had "exploratory discussions" with Baugur, according to the filing.

According to financial sources, the hiring of the bankers came about two or three weeks after Baugur left an offer on the table for Saks that allegedly "went nowhere." The offer is believed to be around $28 a share, those sources said.

Baugur has had an open dialogue with Saks executives for nearly eight weeks now. As one financial contact observed, the fact that the dialogue is continuing indicates a "willing seller." Saks hasn't officially put itself up for sale, and a spokeswoman for Saks declined comment.

Considering that an offer is said to be on the table, financial sources said they wouldn't be surprised if a deal occurred before the year ends.

Also on a possible fast track to a deal is Madden. Industry and financial sources told WWD that the company is keen on being acquired and becoming a private firm. There is some debate over whether founder and company namesake Steve Madden still will be involved with the firm after it is acquired. While some believe that he is planning to walk away from the company, others believe that he will continue working on designs in some capacity, perhaps on a limited basis.

Although there was talk that London-based private equity firm Lion Capital had discussions with Madden over two months ago, the current speculation is that St. Louis-based Brown Shoe Co. Inc. might be a better fit for the footwear firm. Steve Madden Ltd. said, "The company does not comment on market rumors."Meanwhile, the pressure is building on Kellwood, which this week again rejected a reissued offer from Sun Capital Securities Group for $543 million. Sun made an earlier, identical bid in September that also had been rejected by the Kellwood board.

In the latest go-around, Sun said in a letter to the Kellwood board that it is prepared to take its offer directly to the company's other shareholders. Sun has a 9.9 percent ownership position in Kellwood.

While some financial sources fully expect there to be more developments between the two, they also said Sun might face a tough time if it pursues a hostile takeover. That's because Kellwood has a so-called poison pill that could be used to block a tender offer, as well as a staggered board, making it difficult for Sun to try to oust the majority of the existing board members and put in its own favorites in any given year.

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