Saks Inc. has rejected a bid by The Bon-Ton Stores for its northern department store group, and will now try to sell the nameplates individually, financial and retail sources familiar with the negotiations said.
NEW YORK — Saks Inc. has rejected a bid by The Bon-Ton Stores for its northern department store group, and will now try to sell the nameplates individually, financial and retail sources familiar with the negotiations said.
According to those sources, Bon-Ton was the only bidder for the northern department store group, which includes the nameplates Carson Pirie Scott, Younkers, Herbergers, Bergners and Boston Stores. Retail sources said Bon-Ton's bid was rejected because of price. Saks sought $1.5 billion for the group, but the Bon-Ton bid, said to be in the $1 billion range, was far lower than the asking price.
Meanwhile, shares of Saks on Friday tumbled 9.84 percent in trading following the sale of a block of nearly 2 million shares by Morgan Stanley, according to several traders. The stock closed at $18.60, down $2.03, in Big Board trading, with 10.3 million shares trading hands compared with an average volume of just 1.9 million. Analysts and portfolio managers at several investment firms said there was speculation midday regarding the failed Saks/Bon-Ton negotiation.
A spokeswoman for Saks could not be reached for comment.
Sources said Saks and Bon-Ton were haggling over the price for the last few weeks, but that at the end of the day the "difference" between the ask/bid range couldn't be overcome.
A real estate contact specializing in the department store sector, who requested anonymity because he's worked with both firms before, observed, "Saks made the right decision in rejecting the bid. Bon-Ton [without an equity partner] really didn't have the money for it. Now it is a question of who is going to buy the pieces of the northern department store group, and who would be interested in the different locations."
William Susman, president and chief operating officer at investment banking firm Financo Inc., said, "In today's department store industry, as Federated Department Stores and May Department Stores demonstrate, it is an advantage to have scale. While ultimately the shopper will want to have a local option along with a national option, such as a J.C. Penney and Macy's, even though Macy's on a national front is still several years away, there are also strong regional players that exist, such as Lord & Taylor and Nordstrom. The brands in Saks' northern department store group, from an awareness positioning, are below the others, and should have less appeal."
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