Most Recent Articles In Mergers and Acquisitions
Latest Mergers and Acquisitions Articles
- Joe’s Jeans Completes Hudson Jeans, Robert Graham Merger
- Think Tank: Douglas Hand on the Challenge Of M&A for Namesake Brands
- Damiani Family Buys Venini
More Articles By
Seeking to extend its buying spree, NRDC Equity Partners, owner of Lord & Taylor and Fortunoff, is aggressively pursuing Hudson’s Bay Co. of Canada, sources said.
This story first appeared in the July 9, 2008 issue of WWD. Subscribe Today.
Gaining control of the $7 billion Hudson’s Bay, which is privately held and based in Toronto, would be a bold move enabling Lord & Taylor to expand outside the U.S. for the first time.
A deal would link North America’s two oldest department stores: The Bay, founded in 1670 as a fur trading company, and Lord & Taylor, which traces its origins to 1826 on Catherine Street in lower Manhattan.
Hudson’s Bay operates about 580 stores across Canada under names such as The Bay, Zellers, Home Outfitters and Fields.
Richard Baker, president and chief executive officer of NRDC and chairman of Lord & Taylor, was not available for comment Tuesday. NRDC already has about a 20 percent stake in Hudson’s Bay.
NRDC is believed to be weighing other possible acquisitions. In the fall, the company formed NRDC Acquisition Corp. to raise $360 million for the possible purchase of one or more operating companies. It’s considered a “blank check company,” otherwise known as a SPAC, or special purpose acquisition company.
During a seminar organized by Emanuel Weintraub Associates Inc. in April, Baker said, “We basically are very committed to growth within the existing stores we have, but there is an opportunity in Asia and other markets in North America for Lord & Taylor to have stores.”
Baker also said he had just returned from trips to Canada and Mexico, where “several groups” showed interest in bringing Lord & Taylor to locations outside the U.S.
The Bay, with large downtown stores in the 300,000-square-foot to 400,000-square-foot range and smaller ones in suburban areas, would likely be converted to the Lord & Taylor nameplate in more populated and higher-income areas, including downtown Montreal, Toronto and Vancouver, sources said. The Bay is the only traditional department store operation in Canada, meaning Lord & Taylor would have no direct competition in its niche.
However, the logistics in operating across borders poses challenges.
In addition, The Bay has been struggling and is saddled with several dated stores requiring a heavy dose of capital and remerchandising for a comeback. Recently, the chain has been trying to differentiate and upgrade through renovations and enhancements in the offering. A program of limited store closings was also instituted in recent years in an effort to improve the portfolio.
The company’s Zellers discount division is also suffering and has taken a beating from Wal-Mart Stores Inc. Sources familiar with the retail landscape in Canada said Zellers has many poor locations, including former Kmart Canada units. The footprints vary from around 50,000 square feet to more than 100,000 square feet.
Aside from bringing L&T to Canada, the acquisition could propel the growth of NRDC’s new Creative Design Studio operation in New York. CDS is a stand-alone company with a mission to invest in American designers and build them into full-fledged brands with financial, strategic and infrastructure support.
CDS could factor into the remerchandising of Hudson’s Bay stores. CDS designers include Peter Som, whose company is owned by NRDC, as well as Bryan Bradley, Charles Nolan, and Joseph Abboud. Each designer has a different arrangement with CDS.
CDS also orchestrates the proprietary brand business at L&T and wholesales the merchandise to other stores.
Jerry Zucker, the South Carolina businessman who bought Hudson’s Bay in 2006 for close to $1 billion and took it private, died in April. Zucker, who was 58, held the titles of governor and ceo of Hudson’s Bay Co., and was also chairman and ceo of The InterTech Group, a Charleston, S.C.-based company that owns textile, chemical and manufacturing firms.
NRDC has been examining other potential retail acquisitions, including Kleinfeld, the famed New York bridal retailer. In the past, Toys ‘R’ Us, Pathmark, Saks Fifth Avenue and Burlington Coat Factory Warehouse Corp. also were on the radar.
“NRDC is interested in acquiring high-quality retail brand companies that have a real estate perspective,” Baker told WWD at the time of the Lord & Taylor acquisition. “We look at every retail situation.”
NRDC purchased L&T in 2006 from Federated Department Stores Inc. for $1.195 billion. In February, NRDC bought Fortunoff out of bankruptcy, for about $110 million, including debt and other obligations. It plans to put Fortunoff home and jewelry shops in Lord & Taylor.
NRDC is a partnership between the principals of Apollo Real Estate Advisors, a major real estate investor that codeveloped Manhattan’s Time Warner Center with The Related Companies, and the principals of National Realty & Development Corp., an owner and developer of shopping centers in the U.S.
National Realty & Development has more than 100 projects consisting of shopping centers, strip centers, corporate business centers and residential communities.