WASHINGTON -- Hudson's Bay Co., a middle-market Canadian department store chain with a similar assortment to Macy's, has agreed to pay $2.4 billion to acquire Saks Inc., one of America's most prestigious luxury retailers.
Hudson's Bay, founded in the 17th century as a fur trading company, will pay $16 a share in cash, a 30 percent premium to New York-based Saks's closing price on May 20, the day before media reports emerged that Saks was exploring alternatives, according to a statement Monday. The transaction, which brings together the Hudson's Bay, Lord & Taylor and Saks Fifth Avenue brands, creates a company that will operate 320 stores.
The audacious move is a coup for Hudson's Bay Chief Executive Officer Richard Baker, 48, who over the past seven years has acquired and refreshed retail chains while leveraging their real estate. Saks will continue to be based in New York and retain its existing management, Baker said Monday.
While the newly merged entity will combine back-office operations to save costs, the three chains will retain separate buying operations so the merchandise will reflect each brand's identity.
"We believe that by working together we can continue to enhance and optimize the Saks business while preserving their iconic brand," Baker said on an conference call with analysts. "While there are numerous opportunities to collaborate and drive efficiencies, we will respect the integrity and uniqueness of the Saks franchise," he said.
Hudson's Bay is Canada's largest department store chain, with 90 stores selling goods ranging from shoes to perfume and appliances to linen. Last year it generated about C$4 billion ($3.9 billion) in sales.