08/28/2019 09:48 EDT | Updated 08/28/2019 10:49 EDT

Hudson's Bay Co. signs deal to sell Lord and Taylor banner to Le Tote

Le Tote, a clothing rental and subscription business, is picking up the U.S. retailer for $99.5 million.

The Canadian Press

TORONTO — Hudson’s Bay Co. has signed a deal to sell its Lord and Taylor banner to Le Tote, a clothing subscription and rental business.

Under the deal, HBC will receive $99.5 million in cash when the deal closes and a secured promissory note for $33.2 million payable in cash after two years.

HBC will also receive an equity stake in Le Tote, two seats on the company’s board of directors and certain rights as a minority shareholder.

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Le Tote will acquire the Lord and Taylor brand and related intellectual property and assume operations of 38 stores, its digital channels and the associated inventory.

The deal to sell the banner comes as a group led by HBC chairman Richard Baker looks to buy the whole company and take it private.

The Baker group has offered $9.45 per share for HBC, however an initial analysis by the company has suggested the offer is “inadequate.”

The privatization deal also faces opposition from Catalyst Capital Group Inc., which recently acquired a roughly 10 per cent stake in HBC.

“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,” said HBC CEO Helena Foulkes.