SUZANNE KAPNERThe Bon-Ton Stores is considering a partnership with a private equity firm to make an offer for all of Saks Inc., including the upscale Saks Fifth Avenue department stores, according to research that has been quietly circulating among dealmakers.
Saks sold its Proffitt's and McRae's stores to Belk Inc. in April, and put its northern department stores on the block. But the company intended to hold onto its prized Saks Fifth Avenue division, which is attempting to reverse a longstanding decline.
Sources close to Saks said that the Saks Fifth Avenue division has not been formally put up for sale, but acknowledged that board members would have to evaluate any offers.
Industry sources named Bon-Ton, based in York, Penn., as a front runner for the northern stores, which operate under names like Carson Pirie Scott and Younkers, a possibility that gained ground last month when Bon-Ton netted $90 million from the sale of its credit card business.
A report from Mergermarket, a proprietary research firm, said that Bon-Ton was considering a bid in partnership with one or more private equity firms, including Bain Capital, Kohlberg Kravis Roberts, Thomas H. Lee Partners and Apollo management.
Under the scenario being discussed, Bon-Ton would keep the northern stores and the private equity partner would take control of Saks Fifth Avenue.
Mary Kerr, a Bon-Ton spokeswoman, declined to comment. Representatives of Bain and Apollo also declined to comment. Executives with KKR and Thomas H. Lee could not immediately be reached.
Interest in Saks is high following the purchase earlier this year of the Neiman Marcus Group by Warburg Pincus and the Texas Pacific Group.
Industry sources said that private equity firms have been "running the numbers" on Saks Fifth Avenue.
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