HBC, the parent company of storied Canadian retailer Hudson’s Bay, has struck a US$2.65-billion deal to acquire U.S. department store Neiman Marcus, creating a North American fashion juggernaut with an assist from Big Tech. Amazon and Salesforce will take minority stakes in Saks Global, the combined company.

The deal: Following the acquisition, HBC will be the market leader in American high-end retail. The New York- and Toronto-headquartered firm bought Saks Fifth Avenue in 2013, purchased Lord & Taylor the year before that and licensed the Barneys brand four years ago after its bankruptcy. Neiman Marcus, which owns Bergdorf Goodman, also filed for bankruptcy in the pandemic. Saks CEO Marc Metrick will lead the combined company, while HBC CEO Richard Baker will become executive chair.

What about Hudson’s Bay: The company will recapitalize the iconic Canadian business as an entity separate from Saks Global, according to a release announcing the deal, but will continue to wholly own its real estate and retail assets. Saks did not immediately respond to a request for comment on the implications of the recapitalization or whether it is preparing Hudson’s Bay for a sale. Hudson’s Bay has closed three key Canadian downtown department stores since 2020 and customers have complained of poor maintenance.

What’s in it for Amazon: Luxury retail is a market the e-commerce juggernaut has been trying and failing to break into for years, said Doug Stephens, founder of the Toronto-based advisory firm Retail Prophet, in an interview. “Luxury is by definition scarce,” he said—in other words, the polar opposite of the next-day shipping, overwhelming product variety and undifferentiated branding Amazon is known for. Meanwhile, Salesforce already does business with HBC, and the tie-up would strengthen that partnership, The Wall Street Journal reported. Salesforce did not respond to a request for comment and Amazon declined to comment. 

A tough turnaround: HBC has presided over the shuttering of Canada’s 37 Home Outfitters stories in 2019 and a flailing relaunch of the discount Zellers chain in 2023. “Everything they touch seems to die,” said Stephens, noting department stores in general have struggled to adapt to the world of e-commerce. Keldon Bester, executive director of the Canadian Anti-Monopoly Project, said Amazon’s minority stake doesn’t make the deal immune from antitrust scrutiny. “Is this the toe in the water that if this gets clearance, that position grows?”

What’s next: The boards of HBC and Neiman Marcus have approved the transaction, and the proposed deal is subject to regulatory approvals. HBC plans to fund the acquisition through a combination of equity capital from new and existing shareholders and debt.