Lord & Taylor Parent Company Buys Saks For $2.9 Billion
Lord & Taylor, owned by Hudson Bay Co, has announced that it is purchasing the luxury retailer, Saks, for $2.9 billion (assuming Saks’ $500 million debt). Aside from increasing expansion across the U.S, Hudson Bay plans to expand the Saks chain into Canada to compete with another large retailer in the same market, Holt Renfrew, and Nordstrom. The company will pay $16 per share, Saks shares are up nearly 5% from Friday’s closing price of $15.31.
This exciting portfolio of three iconic brands creates one of North America’s premier fashion retailers,” Richard Baker, HBC’s chairman and CEO, said in a statement. “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.”
Saks has a 40-day shopping period where it can take bids from other companies, but HBC doesn’t anticipate that happening. According to the NY Post, two other interested bidders have pulled out. Sources say real-estate titan Barry Sternlicht, pulled out after his private-equity bidding partner, Catterton Partners, got cold feet. “The third bidder was believed to be a Middle Eastern sovereign-wealth fund, possibly from Qatar, but the level of its interest had been difficult to gauge, according to sources,” reads the Post.
The iconic Saks Fifth Avenue shop has been in operation since 1924, generates $600 million in revenue each year. “The Fifth Avenue store is a gem and everything else is second to that,” independent retail analyst Walter Loeb told Reuters. “Many of the stores are not as productive.” The building is worth an estimated $1 billion.
The retailer has struggled with sales over the past few years. In 2008, Saks was faced with struggling sales and sold merchandise at discounted prices. In the same year, Mexican billionaire Carlos Slim Helu bought more than 7.5 million shares of Saks at prices of between $2.87 and $3.57. This brought his family’s stake in Saks up to 17.6%, at $25 million shares total.
Saks currently has 41 stores and 67 outlets.