Stephen I Sadove, Chief Executive Officer, noted, "The Company's Board of Directors and management team remain actively engaged in creating shareholder value.
In 2005, the Company established a process to carefully consider its mix of businesses and their future potential to create this value.
This process identified a significant opportunity to create value through monetizing assets in their slower growth traditional department store businesses.
Consequently, they sold their Proffitt's/McRae's business to Belk Inc in July 2005 and their NDSG business to Bon-Ton this month.
In addition, they are currently exploring strategic alternatives for their Parisian business, which could include its sale.
"As they engage in the review of strategic alternatives for Parisian, they are intensely focused on improving the financial performance of Saks Fifth Avenue Enterprises and appropriately sizing their corporate infrastructure."
As part of the transaction, the Company has entered into a fee for services agreement to provide Bon-Ton with specified support services, including information technology, credit services, and other back office support functions, for a limited period of time.
Management estimates a pre-tax book gain ranging from $300 million to $310 million and an after-tax book gain ranging from $120 million to $130 million on the transaction.
These estimates are preliminary and are subject tochange.
Goldman Sachs & Co and Citigroup Corporate and Investment Banking were retained to advise the Company on the NDSG transaction.
Saks Incorporated operates Saks Fifth Avenue Enterprises (SFAE), which consists of 55 Saks Fifth Avenue stores, 50 Saks Off 5th stores, and saks.com.
The Company also operates 39 Parisian stores and 57 Club Libby Lu specialty stores.