Saks Officials, Japan Tobu Stores Offer Buyout From BAT
The management of Saks Fifth Avenue today announced that in partnership with a major Japanese retailing company it has offered to buy the upscale department store chain from its London-based parent BAT Industries PLC.
Terms of the proposal were not disclosed. Saks management said in a news release that the bid is fully financed.
Retail industry analysts have said the 46 Saks luxury department stores would fetch a price equal to the chain’s annual sales, which totaled about $1.3 billion in 1989. In the view of many analysts, Saks is the most desirable retail property on the market today.
The takeover plan envisions a global expansion of Saks. Current management would oversee operations in the United States while Tokyo-based Tobu Department Store Co. Ltd. would expand Saks in Asia. Eventual expansion into Europe also is contemplated.
Melvin Jacobs, chairman of New York-based Saks, said the potential for branching out overseas has been under consideration for some time.
“Our arrangements with Tobu fulfills the potential for Asia. We believe that the strategic partnership which we have formed with Tobu will ensure management’s continued attention to serving the needs of the U.S. consumer while providing an opportunity to expand Saks into Asia,” Jacobs said.
He said Saks management also intends to “forge a similar strategic alliance for Europe.”
Makoto Nezu, executive vice president of Tobu, said, “As America’s leading luxury store, Saks is in a class by itself, and for some time we have been discussing the possibility of working together outside the United States.”
Tobu is in the midst of a major expansion, including work on a new flagship store in the north of Tokyo. If the joint bid succeeds, a substantial portion of the new store will be used to introduce Saks to Japanese shoppers.
Saks, bought by BAT in 1973 and operated as a holding of BATUS Inc., BAT’s U.S. subsidiary, has 46 specialty department stores in 19 states and employs about 12,000 people. Its flagship store is located on Fifth Avenue in mid-town Manhattan.
BAT, with interests in tobacco, retailing, paper, insurance and other financial services, last year decided to dispose of an estimated $6.6 billion in assets in an effort to fend off an unwanted takeover bid from Hoylake Investment Ltd.
Besides Saks, another BAT-owned retailing company that has been on the selling block is Chicago-based Marshall Field’s.
The $22-billion bid by Hoylake, a bidding group led by the British-French financier Sir James Goldsmith, has been under scrutiny by British and American regulators. U.S. state insurance regulators are looking at the proposed deal closely because of BAT’s ownership of Farmers Insurance Group Inc. of Los Angeles.
