Hudson's Bay to pay $2.4bn cash for Saks
CANADA'S Hudson's Bay said yesterday it would buy luxury US clothes retailer Saks in a $2.4bn (€1.8bn) deal that would add prime real estate to its portfolio and bring the luxury chain north of the border.
HBC, which operates Lord & Taylor in the States and Hudson's Bay in Canada, is offering $16 per share, a 30pc premium over levels in May just before media reports emerged that Saks had put itself up for sale.
HBC is paying cash, including the assumption of Saks' debt.
There is a 40-day "go-shop" period when Saks can seek better bids, but the company said it did not expect to get any. It anticipates the deal will close by year-end.
Saks, famous for its Fifth Avenue flagship store in Manhattan, will operate separately within HBC and have its own merchandising, marketing and store operations teams. It will also keep its New York headquarters.
HBC plans to bring Saks department stores and outlet stores into Canada by converting some of its own locations.
HBC chief executive officer Richard Baker said he saw a potential for up to seven Saks department stores and 25 Off Fifth outlets in Canada, and noted that the firm would open them as quickly as possible.
The combined company would have flagship stores in New York, Montreal and Toronto, and HBC said it would consider creating a real estate investment trust (REIT) to benefit from that portfolio. After US store chain Dillard's announced plans in 2011 to form a REIT, its shares soared.
Saks' Fifth Avenue flagship, in operation since 1924, generates about $600m in sales a year and, by some estimates, the building is worth $1bn.
"The Fifth Avenue store is a gem and everything else is second to that," said retail analyst Walter Loeb. "Many of the stores are not as productive." (Reuters)