The outside of the Saks Fifth Avenue store is seen in New York, October 8, 2009. Reuters / Shannon Stapleton

Canadian-based retailer Hudson's Bay Co. (TSE:HBC) plans to buy New York-based retailer Saks Inc. (NYSE:SKS) in an all-cash deal for $2.4 billion, the companies announced on Monday.

Hudson's Bay will pay $16 per share for Saks, a nearly 5 percent premium to Saks' Friday closing price of $15.31. Saks has appointed Goldman Sachs & Co. to advise it on the sale, the New York Post reported on Sunday. Including the assumption of debt, the total deal is valued at $2.9 billion.

The acquisition will bring together three leaders of the luxury, mid-tier and outlet retail sectors. The Saks Fifth Avenue, Lord & Taylor LLC and Hudson's Bay conglomerate will operate 320 stores in prime retail locations throughout the U.S. and Canada as well as three e-commerce sites.

The deal will also give Hudson's Bay control over some prime Manhattan real estate, Saks Fifth Avenue's flagship store, which generates about $700 million in annual sales. The chain's fleet of 42 stores and 66 outlets are valued at about $1.5 billion, including $805 million for the flagship New York location.

The buyout is targeted to close before year's end. Both companies' boards have approved the transaction, which still needs approval from Saks' shareholders.