UPDATE: August 28, 2019: Fashion rental company Le Tote will acquire Lord & Taylor for 99.5 million Canadian dollars in cash (USD$75 million, according to a press release from the companies) and a secured promissory note for $33.2 million payable in cash after two years, Hudson's Bay Co. and Le Tote announced Wednesday. Le Tote will get the Lord & Taylor brand and related intellectual property, and assume operations of 38 stores, digital channels and associated inventory. Meanwhile, HBC will get an equity stake in Le Tote, two seats on its board and "certain rights as a minority shareholder." HBC and its real estate arm will also "retain ownership of all owned and ground-leased real estate assets related to Lord + Taylor" and pay Lord & Taylor rents for at least the first three years. "Le Tote expects to extend employment offers to the vast majority of Lord + Taylor's associates," the companies said.

Dive Brief:

• Hudson's Bay Co. is poised to sell Lord & Taylor to apparel subscription rental service Le Tote, Women's Wear Daily reports, citing unnamed sources.

• Requests from Retail Dive for further information or comment sent to HBC, Lord & Taylor and Le Tote were not immediately returned.

• Activist investor Land & Buildings on Thursday issued an open letter to HBC shareholders saying that it agrees with a special committee of the board that an offer from a buyout group led by HBC Governor Richard Baker is "inadequate." The firm also claims that "Baker's press release responding to the Special Committee essentially threatens minority shareholders."

Dive Insight:

While Lord & Taylor was the acquisition that launched Baker's retail career, when his real estate company scooped it up around the time of the Great Recession, HBC has failed to give it the attention bestowed upon the other U.S. department store in its portfolio, Saks Fifth Avenue.

A new owner that appreciates its stores could help revive the neglected chain. Lord & Taylor stores were sleek and modern, if modest, architectural contributions to many suburban communities starting in the mid-20th century.

Le Tote is on the cutting edge of apparel​ retail, taking advantage of consumers' willingness to forgo ownership in order to maintain a closet of revolving fashion choices. Lord & Taylor locations, the 45 or so that are left after several closings in recent years, would give the startup a brick-and-mortar presence. HBC sold its Italianate Fifth Avenue flagship to coworking company WeWork, a demonstration of how Lord & Taylor's real estate has been viewed by HBC as its most compelling asset. 

That could be at least, in part, because Baker has a powerful real estate-focused lens. But if Land & Buildings has its way, he may lose some power. The firm said that his "​approach has decisively demonstrated that he is unqualified and far too conflicted to continue as Governor of the Board of Directors, and for that matter, to continue as a director of HBC at all."

The group led by Baker also includes private equity firms Rhône Capital LLC, Hanover Investments (Luxembourg) SA and Abrams Capital Management LP; and coworking startup WeWork Property Advisors. They offered in June to take the department store conglomerate private for 9.45 Canadian dollars per share ($7.12 at the exchange rate at the time), payable in cash.

Jonathan Litt, founder and CIO of Land & Buildings, in a previous letter, had deemed the bid "woefully inadequate" almost immediately.

Correction: This post has been updated to clarify Land & Buildings' claims regarding the special committee of HBC's board.