Oct. 29 (Bloomberg) -- Baugur Group Hf, the Icelandic investment company that owns the House of Fraser department store chain, said it may make a joint bid for U.S. luxury retailer Saks Inc.

Saks's shares rose 9.1 percent in extended U.S. trading.

Baugur and Dubai-based retailer Landmark Group discussed a possible bid and have contracts that would allow them to obtain 9.7 percent of Saks's shares, Baugur said today in a U.S. regulatory filing. Reykjavik-based Baugur said it intends to seek a meeting with Saks executives to discuss a possible offer.

A purchase would be Baugur's first in the U.S. and would give the Icelandic group a company that caters to women in their 40s with tailored clothing. Baugur bought the House of Fraser last year, bringing its investments in U.K. retailers to more than 1 billion pounds ($2.05 billion).

``Saks continues to resonate strongly with people as an important and influential luxury brand,'' Touk Sinantha, an analyst at Members Capital Advisors in Madison, Wisconsin, said Oct. 15. ``It is essentially the only luxury department store left that is digestible in size.''

The New York-based retailer has more than 100 stores under the Saks Fifth Avenue and Saks Off Fifth names.

Company spokeswoman Julia Bentley and Doug Donsky, a New York-based spokesman for Baugur, declined to comment.

Shares Climb

Saks climbed $1.81 to $21.60 at 7:20 p.m. after U.S. markets closed. Earlier, the shares rose 52 cents, or 2.7 percent, to $19.79 in New York Stock Exchange composite trading. They have gained 11 percent this year.

Landmark, owned by Micky Jagtiani, controls a 1.2 percent stake in Saks. Baugur has the right to purchase 12.2 million shares, or 8.5 percent of Saks, through several forward contracts.

Saks Chief Executive Officer Stephen Sadove who assumed the helm in January 2006, revived sales after former Saks Fifth Avenue Chairman Fred Wilson's attempt to attract younger shoppers with contemporary sportswear failed. The retailer's profit fell in four of the past seven years. It had sales of $2.94 billion in the year ending in February.

Baugur, founded by Jon Asgeir Johannesson, controls or owns stakes in international retailers as well as property and media companies. Its brands include Mosaic Fashions, Hamleys, House of Fraser and Iceland.

Baugur said in a July 23 filing that it had acquired contracts allowing it purchase 8.1 percent of Saks for $247 million. Baugur said today it determined it would explore a possible buyout after meeting with Saks' management.

The contracts were established with Landsbanki Islands Hf. Baugur said today it paid Landsbanki $34.9 million to roll over the initial forward contracts and may pay the firm $228.8 million to complete them.

To contact the reporters on this story: Cotten Timberlake in New York at ctimberlake@bloomberg.net; Joseph Galante in New York at Jgalante3@bloomberg.net.

Last Updated: October 29, 2007 19:52 EDT