Saks Fifth Avenue owner Hudson's Bay gets offer to go private

Galtero Lara
Junio 12, 2019

A group that now controls 57 per cent of the shares in Hudson's Bay Company is proposing to buy up the rest of them and take the retailer private.

An independent committee of board directors has been formed to evaluate the bid.

"If you don't go through these processes, you are really vulnerable to a lawsuit alleging that you shoved this down their throats", said Eric Talley, co-director of the Millstein Center for Global Markets and Corporate Ownership at Columbia Law School in NY.

Under the terms of the deal, Hudson's Bay shareholders will receive CAD 9.45 in cash per share, which represents a 48% premium to the stock's June 7 closing price.

A group of shareholders of Saks Fifth Avenue's parent has made a cash offer to take the struggling department store chain private. At its peak in 2015, the retailer was worth nearly $30 per share.

Baker's buyout consortium includes Rhone Capital, WeWork Property Advisors, Abu Dhabi Investment Council and Abrams Capital Management. It also said last month that it was exploring "strategic alternatives" for its Lord & Taylor business, which could include a potential sale, joint venture or merger. A source familiar with Land & Buildings' thinking said the hedge fund considers Baker's offer significantly inadequate.

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In other news, HBC is exiting Germany with an agreement to sell the remaining stake in its German real estate joint venture, and divest its related retail joint venture to its partner, SIGNA, along with assumption of certain obligations for a total consideration of $1.5 billion (Canadian dollars).

The group, which owns a combined 57 percent interest in Hudson's Bay, includes USA private equity firm Rhône Capital, which in 2017 agreed to invest US$500 million in the company. The store has had several owners.

She admitted publicly in April, during the company's fourth-quarter conference call, that a shift to lower-priced merchandise across the Hudson's Bay chain of department stores had resulted in disappointing revenue.

"Strategically, we will be able to fully focus our resources on HBC's North American operations, including our best growth opportunities - Saks Fifth Avenue and Hudson's Bay".

At the time of the Kaufhof announcement, Baker said it was part of a plan to make Saks Fifth Avenue and its Saks Off Fifth subsidiary into global brands. He also became the company's biggest creditor.

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