Hudson's Bay to buy Saks for $2.9bn

Canadian retail giant Hudson's Bay Company plans to acquire US upscale retailer Saks Inc. for $2.9 billion, including debt, the companies announced Monday. Hudson's Bay will pay $16 per share for Saks, which is known for its flagship midtown New York City department store, among other locations. That price represents a 4.5 percent premium to Friday's close and a 30.3 percent premium to the price May 20 before media coverage surfaced on Saks's takeover prospects. "This exciting portfolio of three iconic brands creates one of North America's premier fashion retailers," said Richard Baker, HBC chairman and chief executive, in a statement. The deal marries Saks's ultra-chic retail assets with Hudson's Bay's offerings and those of another longtime US retail luminary, Lord & Taylor, which Hudson's Bay acquired in 2006. Hudson's Bay has 90 locations in Canada, while Lord & Taylor has 50 stores in the US, most of which are in the Northeast. Saks has 41 stories in the US. Hudson's Bay highlighted that it would acquire a world-class retail real estate portfolio, including Saks Fifth Avenue's marquee locations on Fifth Avenue in New York City and Wilshire Boulevard in Beverly Hills, California. Hudson's Bay plans to operate Saks separately run by key members of its existing leadership team and with a continued headquarters in New York. The deal will be financed with a total $750 million in equity affiliated with Ontario Teachers Pension Plans and West Face Capital Inc. Other financing will come from debt and cash on hand. In a recent note, Citigroup said Hudson's Bay acquisition could "make sense," in part because it would enable Hudson's Bay to bring the Saks brand to Canada, where there is a dearth of high-end luxury stores.