TORONTO (Reuters) - No company can say “been there, done that” better than the 340-year-old Hudson’s Bay Co, which predates Canada itself -- and the United States too.
From fur trading to oil drilling, Toronto-based HBC has dabbled in more than a few business ventures, possessed more land than most countries, and been witness to major political events, including the establishment of Canada as a nation from a scattering of colonies.
The C$1.83 billion ($1.84 billion) deal between U.S.-based Target Corp and HBC’s Zellers discount chain puts the focus on a firm that has had to contend with intensifying competition in recent years, especially from the United States, with the arrival of Wal-Mart in 1994.
In fact, the iconic Canadian company became American-owned itself in 2008, when U.S.-based private equity group NRDC Equity Partners bought it for C$1.1 billion.
Hudson’s Bay Co was founded in 1670 -- two centuries before the Canadian federation was established -- under a charter from Britain’s King Charles II. Its purpose was to break the French stranglehold on the lucrative North American fur trade and to make the English aristocrats and merchants who backed it rich.
It spread its trading posts -- which offered European goods in exchange for Indian beaver pelts -- deep into the continent from the shores of Hudson Bay.
At one point, HBC held title to most of northern Ontario and Quebec, all of Manitoba, most of Saskatchewan, the southern half of Alberta, the eastern part of Nunavut territory, and into the United States with portions of Minnesota and North Dakota.
It set up stores along Western Canada’s network of rivers and they eventually gave birth to some of the country’s major cities.
In 1870, it transferred most of its lands to Canada for 300,000 British pounds but retained certain blocks for trading and other purposes.
By the 20th century, HBC’s trading posts were becoming stores, and some of the stores became department stores, mainly at the suggestion of a company director from London’s Harrods department store.
Along with fur trading and retailing, the company has distilled liquor, drilled for oil, explored for minerals and bought and sold land.
Today, Hudson’s Bay Co operates 92 Bay department stores and 69 Home Outfitters stores, plus 279 discount stores under the Zellers brand, which has the popular slogan “the lowest price is the law.”
With the Target-Zellers deal, Hudson’s Bay could move to be more of a high-end retailer.
“Maybe they decided the mid-market is not where they want to be,” Edward Jones analyst Brian Yarbrough said.
“It’s a pretty big deal for Canadian retail,” said Yarbrough, who sees Hudson’s Bay standing to gain as Target would have stolen share from Zellers if it had entered the Canadian market without buying the leases.
Target’s interest in the Canadian market has been talked about for years. In 2004, Hudson’s Bay dismissed speculation is was about to sell Zellers to Target.
Reporting by S. John Tilak