Fanatics and Sixers owner Michael Rubin’s new passion: His Rue La La buys rival Gilt, hoping to build an online clothing colossus

Rue La La, Michael Rubin's Boston-based e-commerce company that connects shoppers to discounts on high-end products, has agreed to buy member-shopping service Gilt from Hudson's Bay Co., the Canadian retailer that owns Saks Fifth Avenue and Lord & Taylor, for a fraction of the $250 million Hudson's Bay paid for the New York firm in 2016, said people familiar with the deal.

Combined as Rue Gilt Group, the company will give members insider deals on clothing and other items, and will operate both services after the sale's planned closing in July. Rue Gilt plans to add 150 people at Gilt sites in New York, Boston, Kentucky, and elsewhere to its own 600-person team, Rubin said. Gilt employed more than 500 at the time of its 2016 sale; many of those employees are expected to remain with Saks, which had integrated Gilt into its operations.

Rubin said he had sought several times to buy Gilt since 2009, when his former company, GSI Commerce, acquired Rue La La. In the late 2000s, Gilt was one of the "unicorn" private companies valued at $1 billion by eager venture capitalists, who poured more than $280 million in equity and debt for a minority stake in the firm from 2007 to 2015, in hopes they would score fat profits in an initial public stock offering that never happened. Disappointed investors included Japan's SoftBank Capital, New York-based General Atlantic, Goldman Sachs, New Enterprise Associates, Draper Fisher Jurvetson Growth, and Matrix Partners.

The venture capitalists' loss could become their patient rival's gain. "We've been a huge believer in the value of combining these business," with a total of 20 million customers, of whom only 3 million are registered with both services, giving both room to grow, Rubin said. With more shoppers, the service will find it easier to win deals from clothing brands, he added.

Rue La La and Gilt each have sales approaching $500 million a year. Rue La La has been adding sales while Gilt has struggled to maintain revenues in recent years. Rue Gilt will be run from Rue La La headquarters in Boston by cofounder Mark McWeeny and his team, McWeeny said.

Rubin founded GSI (its principal successor, Radial, is based in King of Prussia), sold it with his shareholders to eBay in 2011 for $2.5 billion, and now runs the Fanatics pro and college sports-gear company, and owns part of the 76ers and other pro teams.

He was in the news most recently for his advocacy of the Philadelphia rapper Meek Mill, who was freed from prison on Philadelphia probation violation charges this year after Rubin and other defenders helped arrange a legal, investigative, and public relations team to review the accusations against the singer; and for his purchase last year of the struggling Majestic sports-uniform factory near Easton, Pa., where local officials credited Rubin's company with saving 600 jobs.

McWeeny compared Rue La La and Gilt to brick-and-mortar "off-price" store operator TJ Maxx, another Boston-based chain, which acquired Marshall's stores in 1995 and built up what has become one of the most valuable retailers of the Internet era by offering name-brand merchandise at discount prices.

"Off-price is the most thriving part of the retail business today," Rubin said. He added that Rue Gilt planned to buy other brands as well.

Rubin, who has counted China's Alibaba as well as eBay among his major investors over the years, said Rue Gilt's rivals include China-based VIPshop, which has a market capitalization approaching $10 billion; European off-price pioneer Vente-Privee, which is privately held; and Zulily, the Seattle-based smartphone shopping service (with a Lehigh Valley warehouse) purchased by West Chester-based QVC (now operated under the corporate brand Qurate Retail Group) for $2.4 billion in 2015.

In the United States, Zulily is the moderate-price player, and "we are the premium player," Rubin said. He said a majority of Rue La La's business is generated by shoppers using mobile devices, with workstations and desktop computers accounting for the rest.

Rue Gilt says it has no immediate plans for brick-and-mortar stores. Fanatics, founded in 2002, opened its first physical store in New York in 2013; retail stores now account for about 10 percent of that company's $2.3 billion in yearly revenue.