Hudson’s Bay Company (HBC) announced Thursday morning its subsidiary Zellers Inc. is selling up to 220 leasehold interests to Target Corp. (TGT-N) for $1.825 billion.
The deal targets leases as Zellers Inc. does not own most of its locations.
According to the announcement, Zellers Inc. will sublease the properties back from Target Corp. upon closing and continue to operate them as Zellers stores “for a period of time.”
Target Corp. is planning to open 100 to 150 new Target stores throughout Canada in 2013 and 2014.
HBC spokesperson Freda Colbourne could not confirm if Target will be taking over Vancouver or B.C. locations, but noted that according to the deal, Target has the option to buy up to 220 of the leases out of a total of 279 in Canada.
“Target’s looking at all 279,” she said. “They’re going to pick which of the 279 that they want. They can take up to 220.”
She did, however, note Target “is looking for some of the larger centers for their formats.”
Colbourne said a media report that indicated Zellers will be phased out of the Canadian landscape is incorrect.
“The remaining 59 [stores], we will continue to operate as Zellers – it will just be a scaled-down division,” she said.
She noted HBC is currently talking to other American retailers, should Target not choose to buy up the full 220 stores.
“We also are talking with other retailers that we may sell some to other retailers because [Target] might not take the full 220,” she said. “ It’s complicated but we will absolutely continue to have a Zeller’s presence and portfolio – just a smaller one.”
A release from Target notes that the company expects to create thousands of Canadian jobs in the coming years through store renovations, expansions and new construction.
“This transaction provides an opportunity for us to extend our Target brand, Target stores and superior shopping experience beyond the United States for the first time in our company’s history,” Target chairman, president and CEO Gregg Steinhafel said in the company’s news release.