Canadian retailer Hudson's Bay to be taken private by chairman-led group

Marco Green
October 22, 2019

Hudson's Bay Co.'s (HBC) board of directors has accepted a revised offer from a group of majority shareholders led by executive chairman Richard Baker, bringing the retailer a step closer to going private.

The Canadian-based retailer said Monday it will buy back the remaining 43% of shares it doesn't already own at a price of $10.30 Canadian dollars per share [US $7.86], a 9% increase from the $9.45 Canadian dollars per share [US $7.21] the group offered in June.

Baker and his investment group want full control of the retailer, which also owns Sak's Fifth Avenue, in a bid to turn the business around outside the glare of public markets. Since joining HBC last February, Foulkes has been shedding struggling businesses and shifting the focus to the company's two largest divisions - Saks Fifth Avenue and Hudson's Bay.

The deal requires the approval of 75% of the company's shareholders at an upcoming meeting.

"We are pleased to have reached an agreement with respect to a transaction that provides immediate and fair value to the minority shareholders", David Leith, the chair of HBC's special committee, said in a statement.

The group led by Baker, who owns 6.3 percent, had offered C$1.74 billion, or C$9.45 per share, in June, but a special panel of the company said it was "inadequate".

The new price is within the range of a fairness opinion from TD Securities Inc., which told the special committee that HBC is worth between $10 and $12.25 per share. Department stores in particular have struggled to attract new consumers and maintain sales. In August HBC sold department store Lord & Taylor, which it had owned since 2012, to Le Tote, an online fashion subscription service, for $99.5 million. Chief Executive Officer Helena Foulkes, who was brought in past year, also sold flash-sale e-commerce site Gilt and cashed out of European operations. The discount to the sweetened bid suggests shareholders are not expecting either a white knight with a rival bid or an even richer offer from Baker. "Certainly a lot of people would have wanted a lot more from this but in the current dynamics around department stores in North America, I think this is probably as good as they could have hoped".

Other reports by Click Lancashire

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