Hudson’s Bay Co. stock was up 42 per cent Monday after a group of shareholders, including executive chairman Richard Baker, proposed taking the retailer private once it completes the sale of its remaining German holdings for $1.5 billion.
The group, which holds a 57 per cent stake in HBC, is offering $9.45 per share in cash to other investors — the same price paid by one of Baker’s entities to the Ontario Teachers’ Pension Plan in January.
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“While we continue to believe in HBC’s long-term potential, it has become clear that the significant challenges, risks and uncertainties facing HBC in the rapidly evolving retail environment are best addressed in a private market setting,” Baker said in a statement.
“Our all-cash proposal would provide HBC’s public shareholders the ability to realize immediate and certain value for their shares at a substantial premium while transferring the risks and uncertainties facing HBC to the continuing shareholders.”
HBC shares, which ended last week at a record-low close of $6.37, have been falling in recent years as the company has struggled to keep up with a changing retail environment.
The shares traded for $9.20 by late-morning Monday, after hitting a 2019 intraday high of $9.40 earlier in the day.
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The deal is conditional on HBC selling its remaining stake in a German real estate joint venture and divesting its related German retail joint venture, for $1.5 billion under a deal with joint venture partner SIGNA, also announced Monday.
A person familiar with the proposal said on background that the transactions will probably close this fall after going through various approvals.
HBC said it has formed a special committee of independent directors to review the proposal and provide a recommendation to other shareholders.
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The committee will be chaired by David Leith, a former head of investment, corporate and merchant banking at CIBC World Markets and a member of HBC’s board of directors since November 2012.
HBC added that the continuing shareholders involved in the offer have advised the company that they are not interested in an alternative transaction.
The deal is subject to customary closing conditions, including approval by the shareholders and a “majority of the minority” of shareholders.
In addition to Baker, the shareholder group includes Rhone Capital LLC, WeWork Property Advisors, Hanover Investments (Luxembourg) SA and Abrams Capital Management LP.
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