A consortium led by Baugur is understood to be considering a $3 billion (£1.4 billion) offer for Saks, the American department store group, after meeting the retailer’s management.

A move by the Icelandic investor, which owns House of Fraser, would be its first takeover of an American company. The consortium is thought to include Sir Tom Hunter, the Scottish investor.

Gunnar Sigurdsson, Baugur’s chief executive, and Don McCarthy, a Baugur director, have met the Saks management team in America and have been examining the group’s portfolio, according to a report by Drapers, the retail magazine.

The Saks empire includes 54 stores in 25 US states, including its flagship outlet in New York’s Fifth Avenue.

Baugur admitted in July that it had acquired an 8.08 per cent stake in Saks. Since then, it is also believed that Mr McCarthy, who is executive chairman of House of Fraser, has held talks with Ron Frasch, the vice chairman of Saks to discuss opportunities for the department store group.

Wall Street has recently been speculating that Saks is ripe for a takeover and that it would secure at least one bid approach.

Earlier this week, Citigroup, the American investment bank, told its clients that they “would not rule out the potential acquisition of Saks” and named Cerberus Capital, the private equity group, PPR, the French luxury goods company, and Baugur as potential bidders.

Yesterday, Todd Slater, retail analyst at Lazard Capital Markets, said: “Saks is one of the most attractive luxury assets in the market today. Its real estate, luxury positioning, international appeal, commercial potential for lucrative licensing deals all make it an attractive asset. I think it is both credible and likely that Baugur has met and discussed an approach, but I think it is both credible and likely that it has met with numerous other suitors.”

Baugur has already indicated this year that it would be interested in making investments in America and is thought to be attracted in part by the weak dollar.

An acquisition of Saks would give Baugur a means to roll out its Mosaic Fashions brands, which include Oasis, Karen Millen and Coast to the US. Baugur is also thought to have looked to Saks to help shape its vision for House of Fraser, which it is repositioning upmarket.

There have been reports this week that the Saks management team have become more open to the idea of an approach.

Last week, Saks said that like-for-like sales over the five-week period to October 6 had increased 9.5 per cent when viewed against a comparative period the year before. Over the eight months to October 6, like-for-like sales were up 13.3 per cent. It also predicted that like for like sales for the autumn would increase by about 8 per cent. Saks’ sales recovery has been spearheaded by Steve Sadove, the chief executive, who in May also took the role of chairman. This month, shares in Saks have risen from about $16 to $20 spurred by takeover speculation.

Spokesmen in London and New York for Baugur refused to comment and Saks failed to return calls.

History of an American institution

—Founded in 1867 by Andrew Saks and incorporated in 1902 in New York as Saks & Co

—Saks Fifth Avenue opened in 1924

—The first branch stores opened in Palm Beach, Florida and Chicago in 1926, with a Beverly Hills outlet following in 1938

—In September 1998, Saks Fifth Avenue merged with Proffitt’s and became Saks Incorporated. The stock began trading on the New York Stock Exchange on September 18

—Saks has 54 Saks Fifth Avenue stores, 49 Off 5th outlets and 87 CLL speciality stores with more than 7.4 million sq ft of retail space

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