Minneapolis -- In its first-ever expansion outside of the United States, Target Corp. on Thursday said it would acquire up to 220 Zellers discount department stores in Canada from the Hudson’s Bay Co. for $1.8 billion. The deal will allow Target to open 100 to 150 Target stores throughout Canada in 2013 and 2014.
“This transaction provides an outstanding 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," said Gregg Steinhafel, chairman, president and CEO of Target Corp. "We believe our investment in these leases will strengthen the surrounding communities, as well as create strategic and financial value for Target stakeholders."
In a related announcement, Target said that company's chief marketing officer, Michael Francis, will serve as the executive committee sponsor of Target's entry into Canada.
Target will not start converting the Zellers locations until 2013. Until the new Target stores begin to open, Hudson's Bay will sublease the stores back from Target and keep operating them as Zellers.
“This transaction provides attractive long-term value and will allow us to invest substantial capital into our department store and specialty store businesses to continue to drive growth,” said Richard A. Baker, the chief executive of NRDC Equity and the governor of Hudson’s Bay, in a statement. Hudson’s Bay and its Zeller’s subsidiary was acquired NRDC, whose holdings include Lord & Taylor, in 2008.