UPDATE: Hudson’s Bay Company has officially entered into a definitive agreement to acquire Gilt Groupe Holdings, Inc. for $250 million in cash, according to a company statement. The acquisition is expected to close February 1.
Hudson’s Bay expects the transaction to contribute approximately $500 million to its 2016 fiscal year sales. As part of the acquisition, Gilt customers will be able to make returns to Saks Off Fifth discount stores, which may eventually feature Gilt concept shops.
Hudson’s Bay Company (HBC), the parent company of retailers such as Hudson’s Bay, Lord & Taylor and Saks Fifth Avenue, is nearing a deal to buy online luxury retailer Gilt Groupe for approximately $250 million, according to The Wall Street Journal.
A final deal has not yet been reached, and talks can still fall through, according to the report.
Gilt, originally branded as a flash sales retailer, initially had an estimated valuation as high as $1.1 billion in 2011, more than four times HBC’s proposed purchase price. The hefty decline in price mirrors that of fellow flash sales retailer Zulily, which QVC purchased for $2.4 million in August. Zulily had been valued as high as $4 billion in 2013, just days after its initial IPO.
Zulily and Gilt Groupe are both examples of retailers that once thrived specifically in the flash sales sector, but struggled as the business model experienced rapid change over the past few years.
Hudson’s Bay plans to pair Gilt with the off-price Saks Off 5th brand, with initial plans calling for the opening of Gilt shops inside Saks Off 5th stores, according to the report. HBC plans to retain most of Gilt’s management team.