FINANCE

Hudson’s Bay takeover drama continues

BY Marianne Wilson

An offer by the executive chairman and governor of department store giant Hudson’s Bay Co. to take the company private has not been well received — at least for the time being.

In a statement on Friday, the special committee of HBC’s board evaluating the offer by Richard Baker and a group of shareholders said that, based on initial analysis, the C$9.45 Canadian dollars) per share offer is “inadequate.” But the committee’s analysis is still ongoing. It is expected to be completed in September.

In June, the Baker-led consortium, which owns 57% of Hudson’s Bay, had offered to buy the remainder of the struggling retailer and take it private in a deal valued at C$1.7 billion, or $1.28 billion.

The special committee also addressed another issue in its statement on Friday: The unsolicited offer from Catalyst Capital Group to acquire up to 14.85 million common shares of HBC at C$10.11 per share in cash. The bid represents 15% of HBC’s outstanding common shares that is not owned by the Baker-led shareholder group, which would be enough to block the sale of the company to the group.

The committee said it was not in a position to make a recommendation on Catalyst’s offer. But it advised shareholders to exercise caution regarding the offer, noting that it was not a “true alternative” to the shareholder group proposal which, if acceptable terms are reached, will involve the acquisition by the company of 100% of the common shares held by minority shareholders.

“As the Catalyst Offer is not a formal take-over bid for purposes of Canadian provincial securities laws, it does not provide shareholders with certain of the protections that such laws require be provided to shareholders in a formal take-over bid,” the committee stated.

On Thursday, Baker sent a letter to the special committee in which he urged that his offer to take the retailer private be accepted because the company’s strategic plan requires “significant capital investment” to weather “difficult challenges in the current macro environment which pose serious threats to both our operating business and our related real estate assets.”

The committee and its financial advisors are expected to meet with representatives of various shareholders next week to discuss the buyout proposal and Catalyst Capital’s offer.

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