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Hudson's Bay agrees to go private at $1.45 billion valuation

Bloomberg logoBloomberg 10/21/2019 Sandrine Rastello

Hudson’s Bay Co. will go private in a deal valuing the 349-year-old Canadian retailer at $1.45 billion, allowing a group of investors led by Chairman Richard Baker to try their hand at reinvigorating the fading department-store chain.

The board of Hudson’s Bay Co. said it entered into an agreement with investors led by Chairman Richard Baker after the group raised its offer price to C$10.30 a share, up from C$9.45 a share. It approved the offer after a recommendation by a committee of independent directors.

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. While Saks has been the group’s bright star of late, the Canada-based Hudson’s Bay chain, the oldest company in North America, is removing 300 “unproductive” brands and bringing in another 100 in a turnaround effort.

The deal still needs approval by a majority of the minority shareholders. Some of them, including Catalyst Capital Group, had said Baker’s original offer undervalued a company that’s rich in real estate holdings. The board’s special committee also said the initial offer of C$9.45 was too low. Representatives for Catalyst and for Jonathan Litt, an activist investor who’s also been critical of Baker, were not immediately available for comment.

“The special committee is confident that this transaction represents the best path forward for HBC and the minority shareholders,” David Leith, head of the special committee, said in a statement.

Some traditional retailers are struggling and closing stores as consumer preferences change and shoppers increasingly migrate online to competitors like Inc. Department stores in particular have struggled to attract new consumers and maintain sales.

a screenshot of a cell phone: Hudson's Bay gets increased take private offer© Bloomberg Hudson's Bay gets increased take private offer

Hudson’s Bay has been trying everything to lower debt and stop its stock’s slide, most recently selling selling the operations of its Lord & Taylor department store chain to clothing rental subscription company Le Tote. Chief Executive Officer Helena Foulkes, who was brought in last year, also sold flash-sale e-commerce site Gilt and cashed out of European operations.

Read more about the Bay’s struggles in Canada

The stock traded as high as C$10.72 in August on expectations the bid would be raised. It was back at C$9.45, the original offer price, at the end of last week. Over the last five years, the stock has lost about half of its value.

“It’s good to see that there’s a resolution with a good, formal take-private offer and a cash bid, and I think that should be a good resolution for a lot of people,” Greg Taylor, chief investment officer at Purpose Investments, said on BNN Bloomberg. “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.”

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