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From Home Furnishing Business

Hudson’s Bay to Buy Gilt for $250M

Hudson’s Bay Co. (TSX: HBC) will buy online retailer Gilt Groupe in a $250 million cash deal.

Gilt is an online shopping destination, offering its members special access to fashion merchandise, home furnishings and experiences. With more than nine million members and approximately 50 percent of orders generated on its mobile platform, Gilt has cultivated a loyal and devoted millennial following.

"With this transaction we are further accelerating both HBC's all-channel offering and Gilt's growth,” said Jerry Storch, CEO of HBC. “We plan to continue to foster Gilt's culture of innovation, which has helped create a strong brand with a loyal and devoted millennial following. 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. We look forward to welcoming the Gilt team to HBC and to benefitting from the complementary nature of our businesses."

The deal is expected to close on or about Feb. 1, and is subject to regulatory approval and Gilt shareholder approval Hudson’s Bay expects to fund the purchase with cash on hand.

"HBC and Saks OFF 5TH are the ideal home for Gilt and our members," said Michelle Peluso, CEO of Gilt. "HBC understands our proposition and is committed to positioning our business for further success. Our members will find having a brick and mortar presence valuable and a positive addition to the Gilt experience. We are excited for our future and confident that we have the right team in place to continue to innovate the shopping experience and grow Gilt.”

The transaction is expected to contribute about $500 million to HBC's consolidated fiscal 2016 sales and be complementary to HBC's existing business. Additionally, HBC plans to leverage Gilt's mobile and personalization capabilities to accelerate the growth of HBC's digital business across all of its existing banners.

The company also expects to benefit from the integration of Gilt with Saks OFF 5TH locations, including the introduction of a new return program at Saks OFF 5TH locations for Gilt merchandise following the closing of the acquisition. HBC also expects to create Gilt concept shops at Saks OFF 5TH stores, developing a true all-channel model for Gilt.

Hudson’s Bay expects Gilt to contribute about $40 million of adjusted EBITDA by fiscal 2017.


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