(Reuters) - Hudson's Bay Co said on Wednesday it would sell its Lord + Taylor department store operations to San Francisco-based fashion rental service company Le Tote Inc for about $100 million.
The deal comes months after Hudson's Bay executive chairman, Richard Baker, offered to take the Canadian retailer, which also owns luxury department store Saks Fifth Avenue, private in a C$1.74 billion deal.
Retailers, particularly department stores, have been struggling as shoppers spend more online instead.
Hudson's Bay will get C$99.5 million ($74.95 million) in cash when the deal closes and another C$33.2 million in cash after two years. It will also receive an equity stake in Le Tote and two seats on the company's board.
A special committee of Hudson's Bay's board said Baker's offer for the company was "inadequate," while shareholders who must approve the deal have opposed it because it does not provide enough value.
Hudson's Bay, North America's oldest company, said in May it was pursuing strategic alternatives such as a sale or merger for its department store Lord + Taylor, which has struggled to attract shoppers.
Lord + Taylor has seen its fortunes fall while Saks Fifth Avenue has managed to increase sales.
Hudson's Bay announced in 2017 it would sell Lord + Taylor's Manhattan flagship to co-working space manager The We Company for $850 million in 2017.
In fiscal 2018, Lord + Taylor represented $1.4 billion of HBC's $9.4 billion in retail sales, the company said in a statement.
Under the deal, Le Tote will acquire the Lord + Taylor brand and related intellectual property, while assuming operations of 38 stores, Lord + Taylor's digital channels and the associated inventory.
($1 = 1.3275 Canadian dollars)
(Reporting by Jessica DiNapoli and Debroop Roy in Bengaluru; Editing by Anil D'Silva and Steve Orlofsky)
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Updated Date: Aug 29, 2019 00:07:54 IST