The deal to take Hudson’s Bay Co. private is back on.
A group of shareholders, including Richard Baker, agreed to buy out the company’s minority stockholders for $11 Canadian a share — giving the Saks Fifth Avenue parent a valuation of $2 billion. (The deal for the company, listed in Toronto, is valued in Canadian dollars).
Executive chairman Baker and his partners, which already control 58 percent of the firm, initially proposed buying out minority shareholders at $9.45 a share, using proceeds from the 1 billion euro sale of the company’s European operations. That price was later upped to $10.30, an offer that was accepted by a special committee set up by the firm’s board, but was rebuffed by minority shareholders.
Now, Baker has reached a deal with the firm’s largest minority shareholder, The Catalyst Capital Group Inc., which once offered to buy the firm itself for $11 a share. Catalyst holds 32.2 million shares of the firm now and has signed a voting and support agreement backing the new deal.
David Leith, chair of the board’s special committee, said: “We are pleased to have reached an agreement with the continuing shareholders for a privatization transaction at a substantially increased price, which provides minority shareholders with compelling and immediate value and is supported by our largest minority shareholder. I would like to commend Catalyst on their constructive approach to getting a transaction agreed which we believe is in the best interests of the company and the minority shareholders.”
A new meeting to approve the deal will be held in February.
Before the meeting, the special committee will receive a new fairness opinion given the higher price and the firm’s latest results, which showed weaker-than-expected sales.
The company’s third-quarter sales tallied $1.8 billion with a 1.7 percent comparable sales decrease. Net losses grew to $226 million Canadian as adjusted earnings before interest, taxes, depreciation and amortization declined to $40 million from $84 million a year earlier.
There have been some bright spots for the business, although clearly Baker and his supporters feel more can be done away from the glare of the public markets.
During the quarter, Saks Off 5th sales grew 4.9 percent as digital sales increased 15 percent. The company is also reviewing costs to tighten operations and, since the exit of the European business last year, is squarely focused on North American operations, including Saks and its namesake chain.