Hudson’s Bay Company (HBC), parent company of Lord & Taylor, and Saks Incorporated announced that they have entered into a definitive merger agreement whereby HBC will acquire Saks for $16.00 per share in an all-cash transaction valued at approximately $2.9 billion, including debt. The transaction is expected to close before the end of the calendar year, subject to approval by Saks shareholders, regulatory approvals and other customary closing conditions.

HBC intends to finance the transaction, and refinance certain existing indebtedness at HBC, with a combination of approximately $1 billion of new equity, $1.9 billion of senior secured loans, $400 million of senior unsecured notes and available cash on hand.

BofA Merrill Lynch and Royal Bank of Canada have provided HBC with fully committed credit facilities, which together with the equity commitment provided by Ontario Teachers’ Pension Plan, is sufficient to close the transaction.

An entity affiliated with Teachers’ and funds advised by West Face Capital have separately committed to provide HBC with $500 million and $250 million of equity funding, respectively, to support the transaction.

“This exciting portfolio of three iconic brands creates one of North America’s premier fashion retailers,” stated Richard Baker, HBC’s chairman and CEO. “I’ve had a long connection with Saks over the years, and am thrilled to bring one of the world’s most recognized luxury retailers into the HBC family. With the addition of Saks, HBC will offer consumers an unprecedented range of retailing categories and shopping experiences. This acquisition will increase our growth potential both in the U.S. and Canada, generate significant efficiencies of scale, add to our powerful real estate portfolio and deliver substantial value to our shareholders.”

To read the entire news release, click here.

Previously on abfjournal: Bloomberg: Saks Said to Hire Goldman Sachs to Explore Options, May 22, 2013