By and  on March 30, 2005

NEW YORK — A breakup of Saks Inc. appears to be in the works.

Sources said Tuesday that Saks Inc., which is based in Birmingham, Ala., is attempting to line up buyers for its 235-unit department store group, with Belk Inc. as a primary suitor.

There are other parties said to be interested in the Saks department stores, including two private equity firms, Blackstone Group and Apollo Advisors. These same equity firms also are said to be interested in the Neiman Marcus Group. While Neiman’s is officially up for sale, Saks Inc. has quietly been shopping its department stores and has never disclosed plans to sell them.

Dillard’s and Bon Ton are also likely to eye Saks Inc. units. So would J.C. Penney and Sears Holding, but their interest would be narrower, considering their growth strategies are based on expansion to off-mall locations.

Belk, a competitor based in Charlotte, N.C., has sat on the sidelines in the retail acquisition craze — up to now. Belk is said to be interested in the McRae’s and Proffitt’s divisions of Saks Inc., and possibly Parisian as well.

“They’re looking at two divisions fairly seriously,” said a financial source.

“The whole thing would be too big for Belk,” said another financial executive familiar with the situation. “They’re after pieces.”

Officials at Saks Inc. declined comment. Belk officials could not be reached for comment.

Saks Inc. is a $6.4 billion company, with $3.7 billion generated by its department stores and about $2.7 billion by its Saks Fifth Avenue Enterprises division.

Retail sources said Friday that Belk is poised to be aggressive in the acquisitions arena via store openings and acquisitions. The company began a restructuring process in the late Nineties that centralized what was once a confederation of 112 separate companies running Belk stores in 14 Southeast and mid-Atlantic states into a single entity with a stronger capital structure and a single balance sheet. The strategy, orchestrated by Goldman Sachs, has created a more nimble, leaner organization.

In addition, a younger generation of the Belk family stepped up in March 2004 to run the company. The team includes Tim Belk Jr., chairman and chief executive officer; John Belk, co-president and chief operating officer, and McKay Belk, co-president and chief merchandising officer.

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