Canadian retailer Hudson’s Bay Company has acquired Saks Incorporated in a $2.9bn (£1.89bn) all-cash deal.
The agreement will see Hudson Bay, Saks Fifth Avenue and Hudson’s Bay’s luxury department store Lord & Taylor merge into a single retailer, “addressing a broad consumer spectrum across the luxury, mid-tier and outlet retail sectors”.
The combined company will operate 320 stores, including 179 department stores, 72 outlet stores and 69 home stores across the US and Canada, with Saks being rolled out into Canada through all three formats. The business will also operate three websites.
The combined businesses would have turned over C$7.2bn (£4.65bn) in 2012, with EBITDA of C$587m (£372m). Hudson’s Bay Company said it expected to reduce costs by around C$100m (£63m) annually within three years by cutting back office costs and putting “best practices” into place. It is not clear whether this will include redundancies.
The deal will be completed by the end of the year, subject to shareholder approval.
Richard Baker, chairman and chief executive of Hudson’s Bay Company, said it would create “one of North America’s premier fashion retailers”.
“With the addition of Saks, HBC will offer consumers an unprecedented range of retailing categories and shopping experiences,” he added. “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.”
Steve Sadove, chairman and chief executive of Saks, said: “We believe this transaction delivers compelling value to our shareholders and that Saks Fifth Avenue is an excellent fit within the HBC organisation. We also believe that HBC recognises the tremendous value of our people, our real estate, our customer and vendor relationships, and most importantly the power and potential of our iconic brand.”