UPDATE: February 28, 2020: Hudson's Bay Co. on Thursday said that more than 98% of its shareholders, at a special meeting earlier that day, voted for the take-private plan, surpassing the required threshold of 75%. The resolution also required the approval of a "majority of the minority," and more than 94% of those shareholders also voted in favor, according to a company press release.
Around March 3, HBC will therefore exit the Toronto Stock Exchange to become a private company owned by the group of continuing shareholders led by HBC Governor and Executive Chairman Richard Baker. Other shareholders will get CA$11 per share in cash in the deal, which is subject to customary closing conditions, including court approval.
- Hudson's Bay Co. has reached a deal — again — to be taken private by an investor group led by the retailer's chairman, Richard Baker, the retailer announced late on Friday.
- The new agreement is for CA$11 a share ($8.47 at time of publication), an increase from a previous offer of C$10.30 per share.
- Supporting the agreement this time around is Catalyst Capital Group, Hudson's Bay's largest minority shareholder and an opponent to the previous deal. Hudson's Bay plans to hold a special shareholder meeting in February to vote on the deal.
The new offer from Baker's group matches the counter-offer made by Catalyst in November, one of the many wrinkles in the saga around Hudson's Bay's effort to leave the public markets. Given Catalyst's fierce opposition to the deal — balking at it publicly, putting up an alternative offer and challenging aspects of it with Canada's securities regulator — the investment firm's support means Hudson's Bay has cleared perhaps its largest obstacle.
Catalyst, which owns about 17.5% of Hudson's Bay shares, said in a press release Friday it has entered into a voting and support agreement with Rupert Acquisition, the entity set up to take over the retailer. (That agreement allows for each party to terminate their end under certain conditions.)
"HBC is an iconic company and we are a substantial shareholder because we believe in its long-term potential," Gabriel de Alba, managing director and partner with Catalyst, said in the release. He added that the new deal "delivers significantly more value for all minority shareholders."
The Baker group's efforts to take the company private were in doubt just weeks ago. In mid-December, Hudson's Bay canceled a meeting set up to vote on the earlier proposal. That followed reports that Baker's group lacked enough shareholder support to approve the deal, and a legal setback after the the Ontario Securities Commission ordered the company to rewrite an information circular for investors around the proposal. Bloomberg even reported that Baker's group was considering tabling the deal.
The take-private transaction would give investors an exit from the struggling department store company, which owns Saks Fifth Avenue, Saks Off Fifth and the eponymous Canadian department store chain. It would also give Hudson's Bay more control over its operations, sheltering it from public reporting obligations and, with them, outside pressures on its quarterly performance. It would also protect the company from activist investors, which in the past have pushed Hudson's Bay to liquidate its real estate portfolio and pass the cash on to shareholders.
As the company grapples with widening losses, it has already sold off major business units, including the luxury Lord & Taylor department store chain, Gilt Groupe and its German retail unit, among other moves meant to raise cash and refocus the retailer on its core strengths.