Stock skyrockets after shareholder bid to take retailer private

Marco Green
June 11, 2019

The proposal values the company at 9.45 Canadian dollars ($7.12) per share.

At $9.45 Canadian per share, the take-private bid would provide shareholders a 48% premium on HBC's closing share price from Friday while giving the majority shareholders the chance to turn the business around without the pressures of the public market.

Baker and investors including WeWork Property are offering $9.45 a share for the remaining stock of Hudson's Bay. In February, it announced a "fleet review" of Saks Off 5th's 133 stores (with estimates of closing up to 20 USA locations) and the shuttering of all 37 of its Home Outfitters stores in Canada. In May, HBC said it is reviewing strategic options for its Lord & Taylor division, including a sale.

Under Baker's leadership, HBC expanded by acquiring New York-based luxury retailer Saks Fifth Avenue for about $2.9 billion including debt in late 2013 and German department store chain Galeria Kaufhof for $3.36-billion in 2015.

The company said a special committee of independent directors will review the shareholders' privatization proposal and oversee a formal valuation.

'HBC has retained a financial advisor to review options for the Netherlands business, which has not performed to expectations, ' the company said. "There can be no assurance that any definitive agreement will be executed or that the proposed transaction will be approved or consummated".

The Baker-led group's announcement came a few minutes after HBC announced it would raise $1.5 billion by selling its stake in a German real estate join venture and some related assets. Part of the proceeds will be used to strengthen the company's balance sheet by paying down a term loan.

Foulkes said in a statement Monday that the complete divestiture of the company's European stake "will deliver important financial and strategic benefits".

In a statement, CEO Helena Foulkes said that the deal to retreat from Europe allows the retailer to "fully focus our resources on HBC's North American operations, including our best growth opportunities - Saks Fifth Avenue and Hudson's Bay".

Among the loudest critics of HBC's performance under Baker's leadership has been Jonathan Litt, founder and chief investment officer of Land & Buildings, who said repeatedly the company had failed to unlock the "substantial real estate value trapped in the company".

Other reports by Click Lancashire

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