Hudson’s Bay Company, parent of luxury retailer Lord and Taylor, plans to buy Saks for $16 a share, for a total deal of around $2.4 billion.
The purchase price is a 5 percent premium over the company’s Friday closing price of $15.31. Saks’ stock was up almost 4 percent Monday on the news.
The deal has not been approved by Saks’ shareholders, but, assuming they approve, should be concluded by the end of the year. Saks had sales of $3.2 billion in 2012, against sales of $4.1 billion for Hudson’s Bay.
The buyout will merge three big names in retail, featuring luxury, mid-tier, and outlet sectors. The company will have roughly 320 stores, including 179 department stores, 72 outlets, and 69 home stores in the U.S. and Canada.
‘‘We are excited about what this opportunity and being part of a much larger enterprise can mean for the future of the Saks Fifth Avenue brand,’’ Saks Chairman and CEO Steve Sadove said in a statement.
Saks will continue to be run as a separate company, based in New York City, with its own merchandizing, marketing, and store operations.
Hudson’s Bay said that it plans to combine back office facilities and distribution centers to save around $100 million in annual operating costs. It will also look at possible options for the company’s real estate portfolio, which will include a long list of prime retail locations.
Saks Fifth Avenue is a destination store for travelers from around the world because of its sophisticated portfolio of international designers. In allowing management to stay on and not merging operations, Hudson’s Bay hopes to preserve the design base that has built the Saks brand.
The company now has a 40-day period to seek out third party bids, which could lead to a leveraged buyout. As a result of the risk of debt acquisition, Fitch Ratings placed Saks Inc. on “rating watch negative.” It expects to upgrade the rating once the Hudson’s Bay deal is completed.