Hudson’s Bay Co. is pushing back against agitation by real estate-focused activist investor Land & Buildings.
The retail operator said Land & Buildings’ letter on Monday to shareholders, accusing HBC of agreeing to sell a controlling interest in the company to Rhone Capital priced at only 35 percent of its actual value and selling the Lord & Taylor flagship on Manhattan’s Fifth Avenue without seeking approval from minority shareholders is “incorrect on its face.”
HBC said first that it simply “has not” sold a controlling interest, specifying that Rhone will initially hold a 21.8 percent voting and equity interest, which will increase to 30 percent only if the shares are held by Rhone through their eight-year maturity.
“The other terms of Rhone’s equity investment are customary for transactions of this nature and were, contrary to Land & Buildings’ assertion, negotiated at arm’s length,” HBC added.
While Land & Buildings characterized the Rhone deal as an “entrenchment-serving share issuance,” HBC said it’s following “all applicable regulatory requirements” and that the investment and the sale have been well-received by shareholders.
“More than a majority of the company’s current shareholders have already provided their informed consent to the transactions,” HBC said. “None of them stand to gain any special benefit from the transactions. It is therefore Land & Buildings that is seeking to disenfranchise shareholders in order to try to impose its will on the company’s shareholders.”
HBC added that the “interconnected” transactions were unanimously approved by the retailer’s board after determining they were “in the best interests of the company and its stakeholders.”
Land & Buildings and HBC are also disagreeing over Monday’s 3 billion euro offer floated from Signa Holding for HBC’s German business, owner of the Kaufhof chain. Although the activist called the offer “fully financed” and demanded that HBC’s board consider it, the retailer doesn’t seem even close to doing so.
In a separate statement on the offer, HBC called it “unsolicited” and “incomplete,” noting that Signa, which owns rival German department store chain Karstadt, made the offer with “no evidence of financing.”
“As we’ve previously stated, our European business is an important element of the company’s strategy,” HBC said. “HBC remains focused on executing its strategy and plans for the upcoming holiday season.”
HBC added that it will “review the offer in due course,” but will not comment further on it “unless required by law.”
Responding directly to Land & Buildings’ claim that Signa’s offer was financed, HBC urged Jonathan Litt, the activist firm’s founder and chief executive officer, to forward any evidence in support of that claim “as soon as possible.”
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