Fashion rental subscription service Le Tote has signed an agreement with Canada-based retailer HBC to acquire Lord + Taylor’s brand for a total consideration of $100m.
Le Tote will pay $75m in cash and offer a secured promissory note for $25m payable in cash after two years of deal closing.
This transaction follows HBC’s announcement of considering strategic alternatives that could include a possible sale or merger for its Lord + Taylor operating business in May this year.
The agreement covers the acquisition of Lord + Taylor brand and related intellectual property, as well as the assumption of operations of 38 stores, Lord + Taylor’s digital channels and associated inventory.
The merger will combine Le Tote’s technology, data and innovation with Lord + Taylor’s traditional store footprint, e-commerce presence and merchandise selection to offer enhanced shopping experience to customers.
Le Tote is currently exploring options to secure financing for the full purchase price.
The transaction is subject to fulfillment of closing conditions and is expected to complete before this year’s holiday season begins.
HBC CEO Helena Foulkes said: “We’re excited to have reached an agreement with Le Tote that creates a new model for Lord + Taylor, bringing together fashion rental subscriptions with traditional retail.
“Following an extensive review of strategic alternatives, Le Tote’s leadership and innovative approach is the best path forward for Lord + Taylor, its loyal customers and dedicated associates.
“For HBC, this transaction builds upon our previous bold actions, further enabling us to focus on our greatest opportunities, Saks Fifth Avenue and Hudson’s Bay.”
Following the completion of the transaction, Le Tote plans to extend job offers to most of Lord + Taylor’s associates.
Le Tote will also offer an equity stake in the company and positions to two members on its board of directors and certain rights as a minority shareholder to HBC.
HBC and its real estate joint venture HBS Global Properties will have control over all Lord + Taylor owned and ground-leased real estate assets.
HBC and Le Tote can opt to review store network of Lord + Taylor in 2021.