It was reported first in this morning’s Wall Street Journal that Canadian-based Hudson’s Bay Co., parent of both Saks Fifth Avenue and Lord & Taylor and which has recently acquired online retailer Gilt along with major retailers in Germany could be eyeing their next target.
The Bay is in early talks to go after department store Macy’s.
The idea is interesting in the fact that Macy’s absolutely dwarfs the Hudson’s Bay Company in size.
Macy’s has a market capitalization of $10.4-billion U.S. intraday, versus the Bay’s $1.89-billion Canadian or approximately $1.45-billion U.S., prompting the idea real estate is part of the story.
For HBC Executive Chairman Richard Baker real estate has always been central to his acquisitions, like when he when he was behind the acquisition of the Bay in 2008 and then sold the Canadian Zeller’s locations to Target in 2011.
Central to any transaction between the Bay and Macy’s could be raising equity or debt against their real estate portfolio in order to finance it.
Given Bakers history though, this deal could be as much about going after undervalued real estate as expanding in a struggling brick and mortar retail business.