by Brian Lipton

Gilt Groupe

Hudson’s Bay Company has entered into a definitive agreement to acquire online shopping destination Gilt Groupe Holdings, Inc. for $250 million in cash plus transaction costs, using cash on hand. The transaction is expected to close on or about February 1, subject to customary closing conditions and Gilt shareholder approval.

Gilt, which has over nine million members, offers special access to inspiring fashion merchandise and experiences. HBC is the owner of Saks Fifth Avenue, Saks OFF 5th, Lord & Taylor, and numerous other retail brands. The transaction is expected to contribute approximately $500 million to HBC’s consolidated fiscal 2016 sales and be complementary to HBC’s existing business. Additionally, HBC plans to leverage Gilt’s mobile and personalization capabilities to accelerate the growth of HBC’s digital business across all of its existing banners.

The company also expects to benefit from the integration of Gilt through its off-price Saks OFF 5TH locations, including the introduction of a new return program at Saks OFF 5TH locations for Gilt merchandise following the closing of the acquisition. HBC also expects to create Gilt concept shops at Saks OFF 5TH stores, developing a true all-channel model for Gilt.

“With this transaction we are further accelerating both HBC’s all-channel offering and Gilt’s growth,” said Jerry Storch, CEO of HBC. “We plan to continue to foster Gilt’s culture of innovation, which has helped create a strong brand with a loyal and devoted millennial following. Adding Gilt to our rapidly growing digital business is very exciting and we see tremendous potential to enhance our mobile and personalization strategies by leveraging Gilt’s advanced capabilities. We look forward to welcoming the Gilt team to HBC and to benefitting from the complementary nature of our businesses.”

“HBC and Saks OFF 5TH are the ideal home for Gilt and our members,” said Michelle Peluso, CEO of Gilt. “HBC understands our proposition and is committed to positioning our business for further success. Our members will find having a brick and mortar presence valuable and a positive addition to the Gilt experience. We are excited for our future and confident that we have the right team in place to continue to innovate the shopping experience and grow Gilt.”

Scotiabank is acting as exclusive financial advisor to HBC. Willkie Farr & Gallagher LLP acted as M&A legal counsel, and Stikeman Elliott LLP served as company legal counsel. Lazard is acting as exclusive financial adviser to Gilt and Wilmer Cutler Pickering Hale and Dorr is acting as its counsel.