Hudson’s Bay Company to Be Taken Private
Hudson’s Bay Co. (HBC) announced on Jan. 3 that it has entered into an agreement with a group of existing shareholders led by HBC chairman Richard Baker to purchase HBC common shares held by the company’s minority shareholders for $11 Canadian dollars per share. HBC's largest minority shareholder, The Catalyst Capital Group, has voted in favor of the go-private agreement. This is the second time the company raised its offer to minority shareholders. In November, the Baker group — which owned 57 percent of HBC shares — proposed going private, making an all-cash offer of CA $10.30 per share. Toronto-based private equity firm Catalyst, which owns a 17.5 percent stake in HBC, made the counteroffer of CA $11.00 per share for all common shares of the retailer.
HBC plans to hold the special meeting of shareholders to approve the privatization transaction in February. The transaction requires the approval of at least 75 percent of the votes cast by shareholders, and a simple majority of the votes cast by common shareholders. Once the transaction is finalized, the existing shareholders plan to cause the common shares to cease to be listed on the Toronto Stock Exchange.
Total Retail's Take: Going private makes sense for HBC, which owns Hudson’s Bay, Saks Fifth Avenue and Saks Off Fifth retail brands, which have been struggling. (For the most recent quarter, HBC losses widened to CA $226 million from CA $161 million in the prior year period. For example, HBC wouldn't be beholden to public shareholders who demand short-term profits, an increasingly challenging task for brick-and-mortar retailers as they combat market share erosion by e-commerce companies, including Amazon.com. Going private is also not the only tactic HBC is using to improve its business. Last year, for example, HBC formed a joint venture for its European business, sold its unprofitable online brand Gilt, and announced it will close up to 10 struggling Lord & Taylor stores after selling the brand’s flagship building in Manhattan.