Saks Gives Update on 'Go Shop' Period

Zacks

Saks Incorporated (SKS) has provided an update on ‘go shop’ period, which was announced when the company agreed to sell itself to a Canada’s private retailer Hudson’s Bay for $2.9 billion, including debt, in Jul, 2013. Hudson’s Bay, parent of apparel chains like Lord & Taylor’s in the U.S. and Hudson’s Bay in Canada, will pay $16 per share to secure the transaction.

Per the merger agreement, Hudson’s Bay provided a 40-day ‘go shop’ period according to which Saks could find more suitable alternate proposals. However, the ‘go shop’ period expired on Sep 6, 2013 and the company could not find a third party within that period.

Since the company couldn’t find any superior proposal for its shareholders, Saks is now subject to customary “no-shop” provisions, as per the merger agreement,. which is expected to close by the end of 2013.

The combined entity will form a coast-to-coast North American retail portfolio with 320 stores, including 179 full-line department stores, 72 outlet stores and 69 home stores in prime retail locations throughout the U.S. and Canada, along with three e-commerce sites.

Moreover, the combined entity will share a dominant position in the luxury apparel industry of the Canadian markets through Hudson’s already-established market in the region. This is particularly significant as major players like Nordstrom Inc. (JWN) and Target Corp. (TGT) are planning to expand their presence in Canada in the current fiscal year.

Saks currently holds a Zacks Rank #4 (Sell). Another stock in the retail and wholesale sector worth considering is Citi Trends Inc. (CTRN) carrying a Zacks Rank #1 (Strong Buy).

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