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October 31, 2005
Carson's finds a new owner
Even thouugh Saks Fifth Avenue has closed at Old Orchard, their parent company is still making news... namely with the selloff of another Chicago brand name, Carson Pirie Scott. Now, I know Carson's has had lame Christmas windows on State Street the past couple of years, but here's hoping that their new owner, Bon-Ton Stores Inc., keeps the name alive in Chicago (unlike some other lame companies). Reuters has an article about the purchase:
Saks sells Carson Pirie Scott to Bon-Ton StoresSource: Reuters
October 31, 2005
ReutersThe Bon-Ton Stores Inc. said on Monday it agreed to buy 142 stores from Saks Inc. for $1.1 billion in cash, making it one of the largest regional department store retailers in the United States.
The deal involves 142 Saks department stores that operate under the Bergner's, Boston Store, Carson Pirie Scott, Herberger's and Younkers monikers. The purchase will more than double the size of Bon-Ton, which currently has 139 department stores in the Northeast and Midwest.
Bon-Ton shares jumped about 27 percent to $21.19 on Nasdaq on news it clinched the deal for a lower price than the $1.5 billion Saks had originally demanded, traders said.
"The transaction solidifies and strengthens our position in the Midwest and extends our footprint into the Great Plains states," he said.
Saks' Northern Department Store group generated $2.2 billion in sales last year or about one-third of the retailer's total sales. In April, Saks sold its Proffitt's and McRae's chains to Belk Inc. for $622 million.
Luxury retailers have reported strong results in recent quarters as a booming housing market helps to lift spending among high-income consumers. But Saks largely missed out on the bonanza amid a probe into accounting that led to the ouster of three top executives.
Saks restated last year's results after the internal investigation found that the retailer had improperly collected discounts from vendors known as "markdown allowances."
Once the Northern Department Store unit is sold, Saks will be left operating its main, luxury department store chains Saks Fifth Avenue Enterprises with 105 stores, its Parisian chain with 40 stores, and Club Libby Lu with 56 stores.
Saks said on Monday it continues to explore options for Club Libby Lu, which offers makeover and dress-up parties for girls. The chain has received buyout interest from Build-A-Bear Workshop Inc., Too Inc., and Claire's Stores Inc., according to media reports. Those retailers have declined to comment.
Birmingham, Alabama-based Saks said it will have received more than $1.7 billion in cash from the divestitures of the two department store units. With a stronger balance sheet and expectations for improved performance its Saks Fifth Avenue and Parisian businesses, Saks said it may use some the proceeds from the Northern Department Stores for share-buybacks, a special cash dividend, or both.
Saks shares were up 10.3 percent, or $1,72, at $18.38 on the New York Stock Exchange on the news of the dividends, traders said. Saks' stock trades at about 26 times Wall Street analysts' profit forecasts for next year, buoyed by expectation of the unit sales, compared with 17 times earnings for luxury retailer Nordstrom Inc.
The deal with Bon-Ton, which was approved by both companies' boards, is expected to close early in the first fiscal quarter of 2006. Bon-Ton said it expected the purchase to add to its earnings immediately after completion, with cost-cuts starting in 2006 and reaching at least $33 million by 2008.
The deal is subject to certain conditions, including Bon-Ton's financing for the transaction. Bank of America, N.A. has executed a commitment letter with Bon-Ton to provide for the financing of the transaction.
Lazard was Bon-Ton's financial adviser on the deal, while Wolf, Block, Schorr and Solis-Cohen served as its legal adviser. Goldman Sachs & Co. and Citigroup advised Saks.
Posted by Tannerman at October 31, 2005 05:08 PM | Categories: Anchors | News | Other Malls