Saks Inc. plans to enter into a definitive agreement with FAO to operate licensed departments selling FAO merchandise in most of Saks Department Store Group’s 245 department stores.
The companies have also entered into a letter of intent under which Saks would purchase a minority share of FAO’s common equity as part of its bankruptcy reorganization plan and to obtain a seat on the FAO board of directors.
The departments would carry FAO’s developmental and educational products, toys, games, books, multimedia products, and candy under FAO Schwarz, The Right Start, Zany Brainy Kids, FAO Express, or FAO Schweetz names. Implementation of the deal would begin in the second half of 2003. Additionally, the companies anticipate the placement of seasonal Zany Brainy Kids and FAO Express shops in most Saks’ department stores for the 2003 holidays.
Saks and FAO also are exploring several joint marketing initiatives and the opportunity to jointly own and operate an in-store and online electronic baby gift registry business that would be available to their respective customers.
FAO is currently operating under Chapter 11 of the U.S. Bankruptcy Code and has filed a proposed plan of reorganization.
The deal is subject to various conditions, such as financial reviews, approvals, and the negotiation of definitive agreements.
