Saks Fifth Avenue plans expansion into bankrupt Barneys shop in Los Angeles

By Melissa Fares and Jessica DiNapoli

(Reuters) - Luxury department store operator Saks Fifth Avenue, owned by Canada's Hudson's Bay Co <HBC.TO>, is expanding into bankrupt fashion chain Barneys' Beverly Hills shop, people familiar with the matter said on Friday.

The move comes ahead of a shareholder vote later this month to approve Hudson's Bay Executive Chairman Richard Baker's C$2 billion ($1.51 billion) bid to take the retailer private. As a private company, Hudson's Bay will be able to invest in its business without facing scrutiny from public shareholders.

The company's shares fell by almost one-half in the year before Baker announced his bid, but have since risen more than 40%.

Barneys filed for bankruptcy last year due in part to rent hikes. Saks will use some form of the Barneys brand at the Beverly Hills store, according to people familiar with its plans.

The expansion of Saks into the Barneys' location will give the upscale department store three stores on Wilshire Boulevard: its men store, a department store and the third spot in Barneys. It is not yet clear if Hudson's Bay will keep all three locations, the sources said.

Hudson's Bay currently operates 41 Saks Fifth Avenue stores and 114 Saks Off 5th discount locations.

Brand development company Authentic Brands Group LLC bought the Barneys brand and other intellectual property out of bankruptcy last year for about $271 million. Reuters reported that Authentic Brands plans to license the Barneys brand to Saks, setting up plans to open shops in the department store's locations across the United States and Canada.

In a government notice this week, Barneys said it was permanently closing its flagship store on Manhattan's Madison Avenue and its outlet at the Woodbury Common Premium Outlets in Central Valley, New York. It filed a similar notice for its California shops in San Francisco and Beverly Hills.

Both Hudson's Bay and Authentic Brands declined to comment on the Los Angeles store move.

(Reporting by Melissa Fares and Jessica DiNapoli in New York; Editing by Dan Grebler)