Hudson’s Bay Company (TSX: HBC), a portfolio company of Rhône Capital and NRDC Equity Partners, disclosed today that it is pursuing strategic alternatives for the Lord + Taylor operating business, including a possible sale or merger. HBC has retained PJ SOLOMON as its financial advisor for the review of the Lord + Taylor operating business.
Founded in 1826 by Samuel Lord and George Washington Taylor, Lord & Taylor is one of the oldest department store chains in the United States.
NRDC Equity Partners acquired an indirect 20% interest in HBC in July 2006 and acquired Lord & Taylor from Federated Department Stores (now Macy’s, Inc.) in October 2006.
On July 16, 2008, NRDC acquired the remaining 80% of HBC and on January 11, 2012, through an internal reorganization, Lord & Taylor became a wholly-owned subsidiary of HBC.
On December 6, 2017, Rhône Capital, L.L.C. completed proposed US $500 million investment, by way of convertible preferred shares, in HBC for 22.3% of stakes, on an as converted and partially diluted basis. Rhône Capital transfer 50% of its stake to WeWork Property Advisors LLC, a privately-held real estate investment joint venture between WeWork Companies Inc. and Rhôneon July 13, 2018.
On February 8, 2019, HBC sold the Lord & Taylor Fifth Avenue building to WeWork Property Investors in a transaction valued at CDN $1.1 billion or US $850 million. WeWork Property Investors exercised its option to convert CDN $163 million or US $125 million of the transaction value into an equity interest in the building held by HBC through a joint venture structure.
In January 2019, an investment company controlled by Richard A. Baker acquired 17,953,536 HBC common shares from Ontario Teachers’ Pension Plan Board for $169.7 million. The acquisition brought the combined stake in HBC by NRDC affiliated entities to 25% on a non-diluted basis and approximately 19.3%, assuming the conversion of the outstanding convertible preferred shares held by Rhône Capital.
photo credit: Lord + Taylor, The Bay
HBC to Review Strategic Alternatives for Lord + Taylor
TORONTO & NEW YORK–(BUSINESS WIRE)–May 6, 2019–HBC (TSX:HBC) today announced it is pursuing strategic alternatives for the Lord + Taylor operating business, including a possible sale or merger, as part of its strategy to focus on its greatest opportunities.
“This review of strategic alternatives for Lord + Taylor is another example of how we are exploring options to position HBC for long-term success,” said Helena Foulkes, HBC’s Chief Executive Officer. “Over the last year, we’ve taken bold actions and made fundamental fixes that have resulted in a far stronger, more capable HBC, having returned to positive operating cash flow, increased profitability and strengthened the balance sheet.”
Foulkes continued, “Lord + Taylor is a storied brand that has stood for quality, style and service for many years and serves a highly engaged, loyal customer base through a dedicated team of associates. Throughout the review, Lord + Taylor remains committed to serving customers across our stores and digital channels.”
HBC has been simplifying its organization, strengthening its retail operations and unlocking the value of its real estate. The company is also focused on improving its cost structure while making strategic investments in technology and digital capabilities, marketing and stores.
HBC has retained PJ SOLOMON as its financial advisor for the review of the Lord + Taylor operating business and the company is committed to working through it as efficiently as possible.
About Lord + Taylor
Lord + Taylor has built its reputation on offering premium fashion apparel and accessories at incredible value with seamless service. With 2018 annual revenue of CAD$1.4 billion, it serves customers through more than 40 stores in the northeastern and mid-Atlantic US and its online channels.
HBC is a diversified retailer focused on driving the performance of high quality stores and their omni channel platforms and unlocking the value of real estate holdings. Founded in 1670, HBC is the oldest company in North America. HBC’s portfolio today includes formats ranging from luxury to premium department stores to off price fashion shopping destinations, with more than 300 stores and about 40,000 employees around the world. HBC’s leading businesses across North America include Saks Fifth Avenue, Hudson’s Bay, Lord + Taylor, and Saks OFF 5TH.
HBC also has significant investments in joint ventures. It has partnered with Simon Property Group Inc. in the HBS Global Properties Joint Venture, which owns properties in the United States. In Canada, it has partnered with RioCan Real Estate Investment Trust in the RioCan-HBC Joint Venture. HBC has partnered with SIGNA Retail Holdings for real estate and retail joint ventures in Europe.
Jennifer Bewley, 646-802-4631
Andrew Blecher, 646-802-4030