Saks shoots higher on buyout buzz
The retailer reportedly has hired Goldman Sachs to explore a possible sale and could fetch close to $3 billion.
Shares of Saks (SKS) spiked 18% to five-year highs Wednesday morning following a report that the retailer has hired Goldman Sachs (GS) to explore a possible sale to a deep-pocketed private-equity or sovereign-wealth fund.
The knee-jerk rally indicates Wall Street is betting the owner of Saks Fifth Avenue is primed to fetch a healthy premium in a potential auction after years of cutting costs.
According to the New York Post, Saks has hired Goldman to explore strategic options, including a possible sale of the entire company.
The retailer, which generated $3.15 billion in sales last fiscal year, is expected to receive interest from large private-equity firms like KKR (KKR) and Leonard Green & Partners and perhaps from sovereign-wealth funds in the Middle East and Asia, the Post reported.
"It is our long-standing policy not to comment on rumors or speculation," a spokeswoman from Saks said in response to the news.
KKR is weighing whether to make an investment in Saks and could push the luxury retailer to pursue a combination with rival Neiman Marcus Group, which recently hired Credit Suisse (CS) to explore an initial public offering or a sale, Bloomberg News reported.
Neiman Marcus, a luxury department store operator, generated $4.35 billion in sales last fiscal year.
It's not clear if the private-equity firm has already approached Saks. New York-based KKR didn't immediately respond to a request for comment.
A source told the Post that even though Goldman has been hired, "this is very, very early in a long, long process" and the timing of a sale has yet to be finalized.
It's not clear how much Saks would be valued at in a possible sale, but the Post reported that analysts believe the 41-store chain could fetch between $18 to $20 a share, translating to a bid of $2.6 billion to $2.9 billion.
Investors didn't wait around for specifics, bidding shares of New York-based Saks up as much as 18.29% to $16.17 -- its highest intraday level since March 2008. In more recent trading Saks was up 15.30% to $15.77.
More from FOXBusiness
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.