The Daily Mail said a consortium of U.S. and British firms may make a cash offer of $11 per share, or $1.7 billion in all, for the company. The report did not cite sources or name the firms that might bid.
Saks shares were up $1.45, or 22 percent, to $8.05 in afternoon trade but were well short of a 52-week high of $10.65 reached in April. Prior to the Daily Mail report, the company had a market value of $1.06 billion.
A Saks spokeswoman said in an email that the company does not comment on rumours or speculation.
The chain, known for its flagship store on Manhattan's Fifth Avenue, has been the object of repeated takeover speculation in recent years, with media reports saying potential bidders included buyout firms Cerberus Capital Management
Its shares have languished with doubts about the pace of a U.S. economic recovery, though it says its core clientele of wealthy customers is still buying.
In a research note, Standard & Poor's Equity Research retail analyst Jason Asaeda reiterated his hold recommendation on Saks' stock, saying the retailer is an attractive buyout candidate.
Nearly nine months ago, Saks removed a poison pill aimed at averting a potential hostile takeover by Mexican billionaire Carlos Slim. Slim had rapidly raised his stake as Saks shares fell below $3 in November 2008 during the global financial crisis.
Slim now holds a 15.9 percent stake in Saks, making him its largest shareholder. The next largest shareholder is Italian businessman Diego Della Valle, who nearly doubled his stake in Saks in a matter of days in March to 9.3 percent.
FOLLOWING NEIMAN, BARNEYS?
Bahrain investment group Investcorp SA took Saks public in 1996, when shares were priced at $25.
If Saks were to go private, it would follow in the footsteps of rival upscale department store operator Neiman Marcus Group Inc
Another luxury rival, Barneys New York
After stumbling during the economic slowdown as consumers cut back on luxury items, Saks' sales have rebounded. Last week the company reported better-than-expected quarterly results as it sold more items at full price.
Sales in July at stores open at least a year rose 6.4 percent, beating Wall Street estimates.
Saks, founded in New York City in 1919, operates exclusively in the United States and runs 50 full-service Saks Fifth Avenue stores and 55 Off 5th outlet stores.
(Reporting by Phil Wahba; Editing by Derek Caney, Gerald E. McCormick and John Wallace)