UPDATE 4-Hudson's Bay CEO bets big on department stores with Saks buy
* Deal worth $2.9 billion with debt assumption
* Saks to operate separately within HBC
* Baker says to spin off small piece into REIT but own the rest
By Phil Wahba and Solarina Ho
NEW YORK/TORONTO, July 29 (Reuters) - Richard Baker is doubling down on his attempt to revive big-name department stores with a $2.4 billion bid to buy Saks Inc, bringing the New York retailer into Canada and under the same roof as Lord & Taylor and Canada's Hudson's Bay.
Baker's Hudson's Bay Co is offering $16 per share to Saks, a 30 percent premium over levels in May, right before media reports that the luxury U.S. retailer was up for sale. The deal is worth $2.9 billion in cash, including Saks' debt.
"We have this tremendous opportunity in Canada to roll out Saks," Hudson's Bay Chief Executive Baker said in an interview. "Department stores still make a lot of money."
Baker plans to open up to seven Saks stores in Canada plus maybe two dozen Off Fifth outlet stores. He is also eyeing closing one more Saks Fifth Avenue store in the United States, where the retailer has already shuttered several.
The deal is subject to a 40-day "go shop" period where Saks can seek other offers. It will create a North American operation with annual sales of $7.2 billion, based on 2012 figures. Continued...