Toronto and New York — Hudson's Bay Co. (HBC) will acquire Saks Inc. (NYSE: SKS) for $16 per share in an all-cash transaction valued at approximately $2.9 billion, including debt. The acquisition has been approved by the board of directors for both companies and is expected to close before the end of 2013.
The transaction will bring together three retail brands — Hudson's Bay, Lord & Taylor and Saks Fifth Avenue. The combined company will operate 320 stores, including 179 full-line department stores, 72 outlets and 69 home stores throughout the United States and Canada.
HBC will continue to build upon the Saks brand and identity as a luxury retailer, introducing the company to Canada through full-line, outlet and online formats.
"This exciting portfolio of three iconic brands creates one of North America's premier fashion retailers," says Richard Baker, chairman and CEO of Toronto-based HBC. "With the addition of Saks, HBC will offer consumers an unprecedented range of retailing categories and shopping experiences. This acquisition will increase our growth potential both in the U.S. and Canada, generate significant efficiencies of scale, add to our powerful real estate portfolio and deliver substantial value to our shareholders."
The $16 per share price represents about a 30 percent premium to Saks' closing stock price on May 20, 2013. HBC plans to finance the transaction with $1 billion of new equity, $1.9 billion of senior secured loans and $400 million of senior unsecured notes, in addition to available cash on hand.
BofA Merrill Lynch acted as lead financial advisor to HBC. RBC Capital Markets acted as an additional financial advisor on the transaction. Stikeman Elliott LLP and Willkie Farr & Gallagher LLP acted as legal counsel to HBC. Goldman Sachs, Morgan Stanley and Guggenheim Securities acted as financial advisors and Wachtell, Lipton, Rosen & Katz acted as legal counsel to Saks.
HBC was originally founded in 1670. NRDC Equity Partners purchased the company in 2008 and had previously purchased Lord & Taylor in 2006. In Canada, HBC operates Hudson's Bay, a department store with 90 locations, and Home Outfitters, a home specialty store with 69 locations. In the United States, HBC operates 48 Lord & Taylor stores.
New York-based Saks Inc. operates 41 Saks Fifth Avenue stores and 67 Saks Fifth Avenue OFF 5th locations throughout the U.S. The retailer's stock price closed at $15.31 per share on Friday, up from trading at $10.25 per share this time last year.