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The Deal: Hudson's Bay Takes Saks Off The Rack for $2.9B

Stocks in this article: SKS BAC RY GS MS

NEW YORK ( The Deal) -- Hudson's Bay Co. said Monday it was taking the "for sale" sign off iconic department store chain Saks (SKS - Get Report) for $16 per share or about $2.9 billion. There is a 40 day "go shop" period.

The deal will combine Saks with Canada's Hudson's Bay department store and the Lord & Taylor chain -- which NRDC Equity Partners bought in 2006 for $1.2 billion before it acquired Hudson's Bay in a company that generated pro forma sales and normalized EBITDA in fiscal 2012 of approximately C$7.2 billion ($7 billion) and C$587 million respectively.

Financing for the transaction is expected to come from $1 billion of new equity,$1.9 billion in senior secured loans, $400 million of senior unsecured notes and available cash. Ontario Teachers' Pension Plan and West Face Capital Inc. are putting $500 million and $250 million of equity funding, respectively, into the deal. Additional credit facilities are being provided by BofA Merrill Lynch (BAC - Get Report) and Royal Bank of Canada (RY - Get Report).

BofA Merrill Lynch acted as lead financial adviser to HBC, joined by RBC Capital Markets, while Stikeman Elliott and Willkie Farr & Gallagher provided legal counsel. Saks turned to Goldman Sachs (GS - Get Report), Morgan Stanley (MS - Get Report) and Guggenheim Securities acted for financial advice and Wachtell, Lipton, Rosen & Katz as legal counsel.

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