Losing Saks appeal: Sternlicht on the brink of dropping bid
Barry Sternlicht’s bid for Saks has fizzled.
The New York real-estate tycoon has all but dropped out of the auction for the owner of Saks Fifth Avenue, after his bidding partner bowed out of the race, The Post has learned.
Sources said Sternlicht’s investment firm, Starwood Capital, had been working on a bid with Catterton Partners, a consumer-focused buyout firm whose investments have included Restoration Hardware, Breyer’s Yogurt and Build-A-Bear Workshops.
As a result, the outlook for the Saks auction now looks less certain, as Sternlicht had been seen as strong candidate in a race that has been whittled down to three bidders, sources said.
“It looks like Barry is probably in third place now,” according to a source.
Hudson’s Bay, the Canada-based retailer that owns Lord & Taylor, is still participating in the auction, which is being run by Goldman Sachs, sources said.
The identity of the other remaining bidder couldn’t be learned, but speculation has pegged a Middle Eastern sovereign-wealth fund, possibly based in Qatar.
Spokespersons for Saks, Hudson’s Bay and Catterton declined to comment. Representatives for Sternlicht and Goldman Sachs weren’t immediately able to comment.
According to one insider, Catterton had initially approached Sternlicht about making a joint bid for Saks. The idea was that Sternlicht, creator of the W Hotels, would take over the real estate while Catterton operated the stores, the source said.
It couldn’t immediately be learned why Catterton got cold feet. Some sources speculated that Sternlicht was driving a hard bargain on prospective rents for the Saks stores.
“The deal looked like a possible Mervyn’s situation,” according to one insider, referring to the controversial private-equity takeover of the California-based discount chain, which went bankrupt in 2008 after the owners sapped away its cash with stiff store rents.
Some insiders said the collapse of Sternlicht’s deal could pave the way for an acquisition of Saks by Hudson’s Bay. Chairman Richard Baker, a New York property mogul, is said to have long coveted the Saks stores.
Nevertheless, insiders said Baker, a savvy dealmaker who typically scoops up assets on the cheap, is unlikely to overpay for Saks.
Financial sources said the luxury chain could fetch between $17 and $18 a share, although initial bids may have been in the $15 to $16 range.
The possible involvement of Qatar is a “wild card” in the auction, according to one source, noting that the Persian Gulf nation has been on a retail spree of late, lately amassing more than 12 percent of Tiffany shares to become the jeweler’s largest investor.
“There’s a lot of skepticism how serious this unknown bidder could be,” one banking source told The Post. “But you never know.”