Saks Inc (SKS): What Happened?

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Takeover?
After Tuesday’s big-time earnings and strong prospects for the future, rumors flew that Goldman Sachs Group, Inc. (NYSE:GS) had been hired to shop around Saks to prospective buyers, as well as a rumor that buyout firm KKR & Co. L.P. (NYSE:KKR) is a potential suitor for the company. Then, Bloomberg reported that KKR & Co. L.P. (NYSE:KKR)’s potential plan would be to merge Saks with peer Neiman Marcus, Inc. a move that would create a juggernaut luxury department store with more than $7 billion in total sales.

The news delighted investors and analysts, sending the stock up more than 13% in the day’s trading.

Will the buyout/merger happen? At this point, it’s speculation. A Saks buyout is not a new concept, as there were reports in 2010 that the company would be an attractive target with its valuable real estate and conservative balance sheet.

Overall, Saks is firing on all cylinders, and current investors should be delighted. If you haven’t jumped on the train yet, though, I wouldn’t advise doing so now. At nearly 30 times earnings, this company is far, far too richly valued for an entry point.

The article Saks Soars on Earnings and Rumors originally appeared on Fool.com.

Fool contributor Michael Lewis has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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