When the US real estate scion Richard Baker acquired the department store chain Lord & Taylor at the market peak in 2006, retail industry players laughed. Baker, they snickered, was the latest money guy who would get clobbered trying to break into the fashion business.
No one is snickering any more. On Monday, Mr Baker's Hudson's Bay Co announced that it had agreed to buy Saks, one of the oldest and most revered names in luxury retailing, for $US2.4 billion ($2.7 billion).
The acquisition would create a retail behemoth and cap an extraordinary run of deal making by Baker. The combined company would own 320 locations, 179 of which are full department stores. It had combined revenues of about $US7 billion in the 2012 fiscal year.
Mr Baker has largely avoided the follies of other investors who have got into the retail business. He brought in experienced managers (including a handful formerly of Saks), invested in store makeovers and left most of the merchandising decisions to merchants.
Mr Baker's bid for Saks prevailed over a number of other suitors. Among those who explored a deal were Kohlberg Kravis Roberts and the Qatar Investment Authority, a sovereign wealth fund of the Middle Eastern emirate.
While industry experts once questioned whether department stores would stay relevant, with online competition, analysts said Saks' prime locations, like Fifth Avenue in New York, held up well.
"No tourist wakes up in New York and says: 'You know what I'm going to do now? I'm going to log on to the internet and shop'," said Faye Landes, a retail analyst at Cowen.