By Lou WhitemanNEW YORK ( The Deal) -- Canadian retailer Hudson's Bay parent of Lord & Taylor, said Monday, July 29, it would acquire Saks ( SKS) in a deal valued at $2.9 billion in cash and assumed debt. Terms of the deal call for Toronto-based Hudson's Bay to pay $16 per share in cash for Saks, a premium of 4.5% to the target's Friday close and 30% above where Saks traded back in May, before reports surfaced that Hudson's Bay might be planning a move. The deal values Saks equity at about $2.4 billion, with Hudson's Bay also assuming about $500 million in debt. The deal would bring together Hudson's Bay, Lord & Taylor and Saks Fifth Avenue to create a retailer with 179 department stores, 72 outlets and 69 home stores spread across the U.S. and Canada. The combined company would have pro forma EBITDA of about C$587 million ($571.29 million) on sales of C$7.2 billion, with Hudson's Bay pledging to extract about C$100 million in annual synergies within three years. "This exciting portfolio of three iconic brands creates one of North America's premier fashion retailers," Hudson's Bay Chairman and CEO Richard Baker said in a statement. "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." Hudson's Bay, which traces its roots back to 1670, is backed by New York's NRDC Equity Partners LLC, which acquired Lord & Taylor from Federated Department Stores, now Macy's ( M), in 2006 and added HBC in 2008. The transaction provides New York-based Saks with a 40-day "go shop" period to solicit superior bids. Should none emerge, the companies said they expect to close the deal before year's end. Hudson's Bay said it would operate Saks as a separate brand with its own merchandising, marketing and store operations team headquartered in New York. Post-deal Hudson's Bay said it intends to evaluate options to fully realize the value of the combined property portfolio, including potentially creating a real estate investment trust.