Just five months after acquiring Fortunoff, Purchase, New York-based private equity firm NRDC Equity Partners announced late Wednesday that it has acquired Hudson's Bay Co. or HBC from True North Retail Investments, an affiliate of The InterTech Group, Inc. and the owner of HBC. The terms of the transaction is not disclosed.
NRDC also consolidated its ownership of Lord & Taylor, Fortunoff, and Creative Design Studios or CDS along with the acquired HBC under a holding company called the Hudson's Bay Trading Co. or HBTC. The combined entity looks to create a greater focus on The Bay department store business in Canada with an emphasis on the customer by offering better brands and better service.
The InterTech Group, a diversified conglomerate headed by the Zucker family of Charleston, South Carolina, is one of the largest privately held companies in the United States. In 2006, InterTech, through its affiliate, True North Retail Investments, purchased HBC, taking the company private. NRDC also has been a minority partner in HBC since then.
NRDC acquires operating companies in the retail, leisure, lodging, and commercial real estate sectors. The company was created to harness that expertise and analyze operating companies not only for their business value, but for the value of their real estate platform. NRDC looks to invest from $50 million to $750 million of equity in acquisitions that require a total investment of $100 million to $5 billion. As a principal and financial sponsor, NRDC Equity Partners has the flexibility to work alone or with a syndicate of other investors.
HBC, established in 1670, is Canada's largest department store retailer and North America's oldest corporation, generating annual gross revenues of over C$7.5 billion. HBC provides Canadians with the widest selection of goods and services available through retail channels that include over 570 stores led by the Bay, Zellers, and Home Outfitters chains. HBC employs nearly 70,000 associates and has operations in every province in Canada.
NRDC is investing US$500 million in new equity into HBTC, the newly formed combined holding company. The combined entity will now aggregate an excess of US$8 billion in retail sales with 55 million square feet of stores in the United States and Canada and employing about 75,000 people.
Richard Baker, founder, president and chief executive officer of NRDC as well as a director of HBC since 2006, will serve as the chief executive officer HBTC and will become the 38th Governor of the HBC.
In a statement, Baker said, "By acquiring Hudson's Bay Company along with previous acquisitions Lord & Taylor and Fortunoff, we will have an unprecedented opportunity to recreate the retail landscape in North America. Enormous potential exists by upgrading the offerings at both The Bay and Zellers and by bringing Lord & Taylor, Fortunoff & CDS into the mix."
"The combined companies own a portfolio of trophy real estate assets that create spectacular opportunity for development around the existing retail operation," added Baker.
Revealing other executive management appointments, NRDC announced that its Managing Partner Francis Casale will serve as chief financial officer of HBTC and its Managing Director Donald Watros will serve as chief administration officer of HBTC, while NRDC partner Brian Pall will serve as president of the HBTC Property Co.
For this deal, NRDC Equity Partners was represented by Paul, Weiss, Rifkind, Wharton and Garrison, LLP as US legal counsel and Stikeman Elliott, LLP for Canadian counsel. Financo was the advisor for capital markets.
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