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Major Saks Stakeholder Sells Block of Shares

Sources believe Southeastern Asset Management has sold off 3.7 million shares, capitalizing on a price that’s increased since the luxury chain went up for sale.

Saks Fifth Avenue

A major Saks Inc. shareholder sold off millions of shares in the past few days at about $15 a share, capitalizing on a price that’s increased since the luxury chain went up for sale.

This story first appeared in the July 24, 2013 issue of WWD.  Subscribe Today.

Sources believe Southeastern Asset Management Inc. was the seller of a major chunk of Saks stock. The investment advisory firm did not return a request for comment Tuesday, but a block of 3.7 million shares of Saks was sold at about $15.20 late Monday.

While the price could be an indication of what Southeastern believes Saks could ultimately be sold for, there might also be mandates triggering the stock sell-off at a certain price.

“Southeastern might have had a price target,” said one financial source.

Prior to the sell-off, Southeastern was Saks’ third-largest shareholder, with 11.4 percent, or 17.4 million shares — a position that had already been trimmed from more than 29.5 million shares in February.

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Hudson’s Bay Co. is still considered a leading candidate to buy the retailer. HBC could achieve synergies by consolidating certain Saks operations into its other retail holdings, which include Hudson’s Bay in Canada and Lord & Taylor in the U.S.

A small private equity fund is also said to be interested in Saks. While its identity could not be learned, Sycamore Partners could be a possibility. It’s a small private equity firm that has taken stakes in various retail companies including The Talbots Inc. Representatives for Sycamore declined comment.

Qatar Holding, an investment company linked to the royal family of the Gulf state, could be looking at Saks as well to bolster its growing luxury portfolio. Qatar Holding has been buying up Tiffany & Co. stock, and bought Printemps in Paris earlier this year and Harrods in London in 2010.

And last week, a report that Starwood Capital had put in a bid to buy Saks caused the stock to gyrate. But financial sources believe that a strategic buyer would be most beneficial to Saks, which could turn in stronger performances if it were integrated into a retail portfolio.

Financial sources believe that Saks’ stock price is not trading on the fundamentals of the business and has increased since May when Goldman Sachs was hired to try to sell the company. At that time, Saks was trading at about $12. Based on the most recent trading, “The market is indicating that Saks could be sold at $16.50 a share or maybe $17,” said one source. The source also said Saks has indicated to prospective buyers that it won’t entertain any bids under $15. Saks officials would not comment on the speculation. Saks’ stock closed at $15.36, up 2.8 percent, on Tuesday.

Currently Saks’ biggest shareholder is believed to be Mexican billionaire Carlos Slim Helú, with a 15.3 stake, or 23.1 million shares. Diego Della Valle, chairman of the luxury Italian shoe and leather goods firm Tod’s, owned 14.2 percent, or 22.7 million shares, at last count.