HBC Closes Gilt Groupe Acquisition

Hudson’s Bay Co. has closed one of the industry’s first major M&A deals of 2016.

The Canada-based owner of Saks Fifth Avenue, Lord & Taylor and Saks Off Fifth announced Monday that is has finalized its acquisition of luxury e-tailer Gilt Groupe Holding’s Inc.

The acquisition, funded by cash, cost HBC $250 million.

HBC said it will pair the luxury e-commerce business with its Saks Off 5th concept by adding in-store shops and merchandise return in-store. Both stores operate similarly, offering deeply discounted luxury fashion and other goods.

Entrepreneur Kevin Ryan launched Gilt, with its unique concept of online flash sales, in spring 2007. The company had a valuation of $1.1 billion in 2011.

HBC expects Gilt to contribute about $500 million to 2016’s sales and $40 million to adjusted EBITDA by 2017.

HBC also gained 9 million Gilt members as customers.

“With this transaction, we are further accelerating both HBC’s all-channel offering and Gilt’s growth,” said Jerry Storch, CEO of HBC, when the acquisition was announced in January. “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.”

HBC has been an increasingly active acquirer over the past few months.

In late September, the company closed its purchase of Galeria Holding to create HBC Europecomprised of German mega department-store chain Galeria Kaufhof, Belgium department store Galeria Inno and Sportarena. The unit delivered a 6.6 percent same-store sales jump during the first month of HBC’s ownership, the company said during its Q3 earnings release.

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