Will This Canadian Company Really Buy Macy’s?

 

There are some things that are so uniquely Canadian you can’t miss ‘em. Tim Hortons, bacon, hockey, toques, and living in a place where the air hurts your face in the winter; All of these are stellar examples, but none hold a candle to the pillar of Canadian history that is the Hudson’s Bay Company (HBC).

Founded on May 2nd, 1670 when Prince Rupert was granted a charter (by his uncle, King Charles). From 1670 until 1870 the fur trade was the chief focus of the HBC. But over the more than hundred years since, the brand has become synonymous with all that is Canada. It is the oldest incorporated joint-stock merchandising company in the Western world.

Now this Canadian stalwart has its eyes set on American giant Macy’s.

 

 

The two companies have a huge gap between them in terms of market value – shares of Macy’s closed at 6.4 percent  ($32.69 USD) on Friday, while Hudson’s Bay rose to $10.39 CAD, reported CNBC. “Hudson’s Bay has a market value of roughly $1.4 billion, compared to Macy’s $9.8 billion as of this morning” says the Wall Street Journal. Although the two are in preliminary talks, this interest appears to be a way for HBC to extend its already growing American reach. The company already owns both Lord & Taylor and Saks Fifth Avenue and has seen great growth in both companies since acquiring them.

Macy’s is a Cincinnati, Ohio-based company with a real estate portfolio that includes around 900 stores in the U.S (this number also includes its Bloomingdale’s outlets). While the buyout would require HBC would to raise a large amount of capital to secure the price tag, the company is known for making money off its existing real estate. For example, CNBC reports “After buying Saks for $2.9 billion in 2013, it secured a $1.25 billion 20-year mortgage for its Fifth Avenue flagship location in New York, valuing the property at $3.7 billion.”

The idea of the smaller HBC acquiring a monster company like Macy’s may not make sense at first glance, aside from the obvious growth. It is a huge risk. That said, Macy’s has been suffering from consumers’ shifting shopping habits and expectations. They lost sight of the changes in the market and became far too large to implement meaningful change from top to bottom.

With HBC’s earned expertise transforming floundering companies and turning them around in Canada, USA, and Germany, the company would come into the acquisition with a long list of best practices already on hand. This shift would signal to everyone on payroll that the times they are a changin’! This acquisition has the power to either make HBC an even more formidable force in the retail industry, or break them. But for a company as old and heralded as HBC, it is safe to say the cards are in their favor.

Dante Berardi Jr.

Dante Berardi Jr.

Dante Berardi Jr comes to Hubba from a background in content creation and grant writing for musicians and artists. A writer/musician himself, Dante has a thirst to consume words and the stories they create when pieced together. He sleeps too little, reads too much, lives on coffee and will talk your ear off about vinyl.
Dante Berardi Jr.