BAUGUR has stepped up its takeover interest in Saks, the New York-based luxury retailer, by hiring NM Rothschild and Financo, a US corporate-finance boutique, to advise on the deal.

The privately owned Icelandic company announced at the end of last month that it could make a joint bid with Dubai’s Landmark Group. It is thought they are working with Sir Tom Hunter, Scotland’s richest man.

City sources cautioned that no decision had yet been made about whether to press ahead and insisted that it was unlikely the pair would make a move before Christmas.

It is expected that any takeover bid for Saks would be worth between $3 billion (£1.4 billion) and $4 billion.

The retailer operates department stores across America under brands such as Saks Fifth Avenue, Off 5th and Club Libby Lu (CLL). It sells clothes, shoes, accessories, jewellery, cosmetics, gifts and home furnishings.

The group traces its roots back to 1867 and a business founded by Andrew Saks. It incorporated in 1902 in New York as Saks & Co. Its Saks Fifth Avenue store has been serving customers since 1924 and has become an American institution.

In one episode of the popular American sitcom Friends, Rachel gets offered an interview at Saks Fifth Avenue, to which Phoebe replies: “It’s like the mothership is calling you home.”

Actress Winona Ryder was caught shoplifting at the Saks Fifth Avenue store in Beverly Hills, California, on December 12, 2001.

In September 1998 Saks Fifth Avenue merged with Proffitt’s and the shares began trading on the New York Stock Exchange.

Its portfolio spans more than 190 outlets including 54 Saks Fifth Avenue stores; 49 Off 5th outlets and 87 CLL speciality stores with more than 7.4m sq ft of retail space.

Baugur has built up an 8.5% stake in the high-end retailer. Landmark, which owns hyper-markets in India, has just over 1% of Saks stock.

The current weakness of the dollar gives foreign buyers a head-start against domestic buyout investors. Buying the business would pave the way for Baugur to expand its British high-street brands, including Karen Millen, into the US market.

It would be regarded as a trophy asset and its brand name would play well for overseas expansion, particularly in the Middle East. It has already struck a number of international licensing deals. Baugur declined to comment on the Saks deal.

The news came as Mosaic, parent company of Karen Millen, Oasis, Shoe Studio and Warehouse in which Baugur has a stake, formally tied up a joint venture with Arctic Group to expand in Germany. The deal could pave the way for more than 300 stores in the country.

Derek Lovelock, chief executive of Mosaic, said: “The German market is a large and exciting market for our brands. This joint venture with Arctic is a springboard for further growth in Europe.”

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