Private Equity Buyers Circle Saks, Inc.

Would the private equity buyout of Saks Incorporated SKS be considered a risk? For one, Saks has actually outperformed many of its peers, and in the second quarter, sales rose 5.1% from a year ago while gross margins rose 7.01% due to lower promotional activity. To be more specific, patterns of luxury spending would make Saks, which has a market cap of about $1 billion based on today’s share price, an attractive long-term bet. U.S. and British buyout shops are close to offering $1.7 billion, or $11/share, for the high-end retailer. The report has put a charge into Saks' stock, which is up 24% at $8.19, and the rumored price is more than the 52-week high of $10.65 reached in April. Based on the historical stock price, the company would be a bargain compared with the $22 it was trading in late 2007. For the full article, check out the Wall Street Journal Online.