The Governor and Executive Chairman of the Hudson's Bay Company Richard Baker During a Press Conference in Amsterdam the Netherlands 17 May 2016 the Canadian Department Store Chain Hbc Wants to Open Twenty Branches in the Netherlands in the Next Two Years Hudson Bay who Are Looking Into Buying Dutch Department Store Chain V&d Netherlands AmsterdamNetherlands Canada Economy Hudson's Bay - May 2016

The battle over the Hudson Bay Co. heated up Tuesday with the special committee of the board of directors denouncing a bid by The Catalyst Capital Group to acquire the company as “not reasonably capable of being consummated.”

The HBC committee has already given a thumbs-up on the $10.30 per share bid by Richard Baker, HBC’s executive chairman, partnering with other key shareholders who combined own 57 percent of the shares of the company.

But last Friday, Catalyst proposed an $11-per-share offer for the company. The figures are in Canadian dollars.

In response, HBC on Tuesday stated that the special committee gave “careful consideration” to the Catalyst proposal including how it would be financed, how it would undergo the due diligence, and other matters.

Baker’s group, referred to as the “continuing shareholders,” informed the special committee on Tuesday that they are not interested in any transaction that would result in a sale of their interests in HBC.

Basically, Baker’s group said accept its all-cash, $10.30 offer to take HBC private, or let HBC remain as a public company. Baker’s group of shareholders includes Rhône Capital, WeWork Property Advisors, Hanover Investments (Luxembourg) and Abrams Capital Management.

The group also said Catalyst’s offer is “incapable” of being completed since at least three-quarters of the votes cast by shareholders is needed to approve the transaction and Baker’s group represents a majority of the shares.

A special shareholder’s meeting is scheduled for Dec. 17 when shareholders will vote on Baker’s offer. The special committee continues to recommend that minority shareholders vote for Baker’s offer.

On Tuesday, as uncertainties over HBC’s future grew, the stock priced dropped about 4.5 percent, or 44 cents, to $9.30.

Catalyst’s offer is “illusory, intended to mislead minority shareholders, manipulate the market and would only serve to frustrate the opportunity for minority shareholders to receive premium cash consideration for their shares,” Baker’s group said. The group added that Catalyst’s offer would further leverage up HBC and force it to close doors, shed jobs and impact pensioners.

Catalyst, a Canadian private equity investment firm specializing in distressed and undervalued Canadian situations, has filed a notice of application for a hearing with the Ontario Securities Commission on the arrangement between Baker and his group. Catalyst claims that Baker’s actions are “contrary to the public interest, on the basis of misrepresentations in a circular (issued earlier this month) and other potential securities law violations, and a deeply flawed process by which the company accepted Baker group’s offer.”

Catalyst also contends Baker’s bid is unfair because it uses assets of the company belonging to all shareholders and that it undervalues the company.

Catalyst said it exercises control or direction over 32.2 million HBC shares, representing 17.48 percent of the issued and outstanding common shares, and that it wants HBC to postpone its shareholder vote set for Dec. 17. Catalyst said its offer is a “bona fide, independently financed all-cash offer that can be completed in a timely manner by February 2020.”

Baker’s bid would be funded by the sale of its German retail and real estate holdings to Signa, which was announced earlier this year. HBC has been streamlining and is down to operating the Saks Fifth Avenue, Saks Off 5th and Hudson’s Bay chains. Aside from the Germany operations, HBC in the past couple of years sold off Gilt and Lord & Taylor, closed Home Outfitters in Canada, and has sold off some real estate as well including the Lord & Taylor building on Fifth Avenue and 38th Street in Manhattan.

Recently, HBC had its 79 owned properties, including the Saks flagship, HBC’s most valuable property, appraised to help evaluate the company in advance of the vote on taking the company private. The Saks Fifth Avenue flagship was appraised at $1.6 billion U.S., representing a huge drop from an appraisal in 2014 at $3.7 billion. At the time, HBC boasted that the value of the flagship far exceeded the $2.9 billion that HBC paid for all of Saks Fifth Avenue in 2013.

The lower valuation of the Saks flagship was attributed to a declining performance by the store and the retail landscape overall, particularly the department store channel, as well as the rise of e-commerce and the drop in market rents on Fifth Avenue. The flagship is in the final stages of a dramatic $276 million multiyear modernization. Initially, the cost of the transformation was put at $250 million. CBRE appraised Saks flagship, and Cushman & Wakefield did the other 78 properties.

Lower real estate appraisals lessen the overall value of the company. In HBC’s case, the real estate represents the lion’s share of the stock price, or $8.75 a share in Canadian dollars, according to the appraisal.

Back in June, Baker and his group announced a $9.45-per-share offer and subsequently upped the offer to $10.30.

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