Bon-Ton buys Saks stores

US retail group Bon-Ton Stores announced on Monday its agreement to the purchase of 142 stores from Saks Northern Department Store group for $1.1 billion (£622 million) in cash. This makes Bon-Ton one of the largest regional department store retailers in the US . The transaction is expected to be completed in the first fiscal quarter of 2006. Saks earlier rejected an offer from Bon-Ton before agreeing to this one.

"We believe (this) will drive greater profitability, and a robust retail platform from which to attract and retain key vendors," Bon-Ton chief executive Bud Bergren said in a statement. Bon-Ton has 139 department stores in the Northwest and Midwest and two furniture stores. With this acquisition, approved by both companies' boards, it will have a total of 281 stores in the region. Saks' Northern Department Store group operates Bergner's, Boston Store, Carson Pirie Scott, Herberger's and Younkers. Last year it generated $2.2 billion in sales, equal to a third of Saks' total sales.

With the sale of this division, Saks will be left with Saks Fifth Avenue Enterprises, which operates 105 stores, its Parisian chain with 40 stores, and Club Libby Lu which operates 56 stores. Earlier this year Saks sold a group of Southern department stores to Belk for $622 million. Bergren expects earnings from the acquisition immediately after completion of the transaction, with cost cuts commencing in 2006. He said he expected earning to reach at least $33 million by 2008.