This morning, Hudson’s Bay Company and Saks announced that they have entered into a merger agreement that will see HBC acquire the American luxury retailer, paying $16 per share or approximately $2.9 billion, including debt.

The deal will bring together the Hudson’s Bay, Lord & Taylor and Saks Fifth Avenue brands, and the combined company will operate 320 stores, including 179 full-line department stores, 72 outlet stores and 69 home stores throughout the US and Canada, along with three e-commerce sites.

“With the addition of Saks, HBC will offer consumers an unprecedented range of retailing categories and shopping experiences,” said Richard Baker, chairman and CEO, Hudson’s Bay Company, in a statement. “This acquisition will increase our growth potential both in the U.S. and Canada, generate significant efficiencies of scale, add to our powerful real estate portfolio and deliver substantial value to our shareholders.”

The acquisition of Saks, which HBC said is part of its strategy to enhance its growth, will include the introduction of the luxury retailer to Canada through full-line, outlet and online stores, building upon Saks.com’s existing presence in the Canadian marketplace.

“We believe this transaction delivers compelling value to our shareholders and that Saks Fifth Avenue is an excellent fit within the HBC organization,” said Steve Sadove, chaiman and CEO, Saks, in his own statement. “We have made significant progress over the past few years to position Saks for future growth and to evolve into an omni-channel retailer. We are excited about what this opportunity and being part of a much larger enterprise can mean for the future of the Saks Fifth Avenue brand.”

The transaction has already been approved by the board of directors for both companies and is expected to close by the end of 2013, pending approval from Saks’ shareholders, regulatory approvals and other closing conditions.

Photo: Zyphbear, Flickr Creative Commons