Why Hudson's Bay Co. Just Scored on Their $2.9 Billion Saks Purchase

Posted by Ryan Robinson on Jul 29, 2013


High end fashion retailer Hudson's Bay Co. just announced plans to acquire competitor Saks, Inc. for an estimated $2.9 Billion by end of year.

Hudson's Bay Co., owner of Lord & Taylor high end fashion retailer, just entered into a deal that will significantly grow their business, increase shareholder value, and most importantly eliminate a competitor that will provide them immense strategic benefits moving forward.

Hudson's Bay Co., regarded as the oldest commercial corporation in North America and one of the oldest in the world, just got an incredible breath of fresh air. Since the company's founding in the fur trading business, it has undergone many transitions and will now have significant retail & ecommerce exposure spanning luxury, mid-tier, and outlet retail categories in the United States and Canada. 

HBC has been owned by the New York-based firm, NRDC Equity Partners since 2008 at which time it was combined with the Lord & Taylor brand. L&T, the oldest luxury, specialty-retail department store chain in the United States has long been a competitor with Saks Fifth Avenue. 

What the Acquisition Means

Bringing together HBC's The Bay, Lord & Taylor, and the Saks brands all under one roof will provide not only significant increases in cash flow, but also very substantial long-term strategic benefits as the companies consolidate supply chains, utilize seasoned management across business units, and expand into new markets.

“This exciting portfolio of three iconic brands creates one of North America’s premier fashion retailers,” stated Richard Baker, HBC’s Chairman and CEO. “I’ve had a long connection with Saks over the years, and am thrilled to bring one of the world's most recognized luxury retailers into the HBC family."

HBC entered into this deal to increase growth potential in the US & Canada, generate more extensive economies of scale, further develop their real estate portfolio, and deliver more value to shareholders. After the acquisition, the company will have a total of 32 million square feet of retail space spread across 320 different stores in all three of it's namesake brands. 

The company has plans to open seven Saks stores in Canada and about two dozen more locations under the Saks Fifth Avenue Off Fifth brand to further increase retail exposure in the region. Saks will remain a seperate unit within HBC, as the company wants to preserve & build upon the iconic luxury retailer's powerful brand. 

How do you think this deal will effect Saks in the long run?



Topics: saks acquisition, hudson bay co, corporate acquisition