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Saks to spin off Fifth Ave.
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July 19, 2000: 5:32 p.m. ET
New Saks Fifth Avenue Enterprises to be publicly traded by November
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NEW YORK (CNNfn) - Saks Inc. plans to spin off its flagship Saks Fifth Avenue department store business, as well as its Saks Direct and Saks Off 5th operations as a new publicly traded company by November, ending a two-year marriage of luxury and traditional department stores.
According to Saks Inc. Chairman and CEO R. Brad Martin, the deal will enable the traditional department store division of Saks Inc. to get back to its roots. Saks Inc. was created in 1998 when Proffitt's Inc. bought Saks Holdings Inc. for $2.1 billion in stock.
 "Saks Fifth Avenue is the premier luxury department store enterprise, and (the rest of Saks Inc.) is comprised of a portfolio of leading traditional department store franchises," Martin said in a statement. "Given the distinct growth prospects of each business and their present size and complexity, the Board of Directors has concluded that the two businesses would now be best positioned as independent, publicly owned companies."
Saks will distribute 100 percent of newly created Saks Fifth Avenue Enterprises Inc. to its shareholders in a tax-free transaction. Saks (SKS: Research, Estimates) shareholders will receive one share of SFA Enterprises for every three shares of Saks they hold.
Fractional shares will be paid in cash and the record date is expected to be in mid-October.
Martin said the spin-off will create "minimal 'negative synergies'" of about $6 million after tax.
SFA Enterprises is expected to have annual revenue in excess of $2.5 billion and will have assets of about $2.3 billion, with 61 Saks Fifth Avenue stores in 23 states. The company will be headquartered in New York.
Birmingham, Ala.-based Saks Inc. will retain its Proffitt's, McRae's, Younkers, Parisian, Herberger's, Carson Pirie Scott, Bergner's, and Boston Stores. The company will have 251 stores in 21 states
A new name for Saks Inc. will be determined at the June 2001 annual meeting. 
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