Saks sold to Lord & Taylor’s Canadian owner Hudson’s Bay

Luxury retailer Saks Inc. is going Canuck, selling itself for $16 a share to Hudson’s Bay, owner of department store chain Lord & Taylor.

The deal represents a 30% premium to Saks’ stock price on May 20, just before speculation emerged about a possible acquisition. The price is 4.5% above Saks’ closing price Friday.

The companies pegged the total value of the deal at $2.9 billion, including debt.

Together, Saks and Hudson’s Bay will create a business that spans luxury, mid-tier and outlet retail categories, with 320 stores total. The Canadian company said it expects roughly $97.3 million in cost savings over three years.

New York-based Saks has 41 of its eponymous upscale stores as well as 67 outlet locations under the Off 5th banner. The most substantial demand for shipped Saks products comes from Canada.

Hudson’s Bay runs its namesake department store brand, which it says is the largest of its kind in Canada. The company also operates the country’s largest home specialty superstore line, Home Outfitters, and Lord & Taylor in the U.S.

Hudson’s Bay was founded in 1670, which it says makes it the longest continually operated company in North America.

Both the Hudson’s Bay and Saks boards approved the acquisition, which is expected to close before the end of the year. Saks shareholders and regulators have yet to sign off on the deal.

Saks can also take advantage of a 40-day “go shop� period in which it can solicit better proposals from more suitors.

Otherwise, the luxury chain and its bargain offshoot will operate separately under the Hudson’s Bay umbrella, likely with its existing management team, according to Hudson’s Bay. It will remain headquartered in New York.

In late morning trading in New York, Saks was trading up 56 cents, or 3.7%, at $15.88 a share.

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