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 future of the Hudson’s Bay Co. continues to rage.

Last week Institutional Shareholder Services, considered an influential advisory firm, gave a thumbs down to the bid by HBC’s executive chairman Richard Baker and a group of like-minded major shareholders to take HBC private for $10.30 Canadian a share.

ISS characterized the bid as unfair and questioned whether the offer maximizes shareholder value, among other concerns.

News that ISS had issued a report criticizing Baker’s bid emerged Monday when the special committee of the HBC board, which has already approved his bid, said ISS’ analysis was flawed. A shareholder’s vote on Baker’s bid is scheduled for Dec. 17. For Baker’s bid to succeed, a majority of the minority shares must vote for it.

David Leith, chair of the special committee, said, “We are disappointed by the ISS recommendation and the errors and flawed rationale of ISS. The $10.30-per-share cash offer is in the best interests of HBC and fair to minority shareholders.”

“The $10.30-per-share offer is the only offer available to minority shareholders and provides immediate and certain value at a significant market premium. ISS acknowledges there is meaningful downside risk if shareholders do not approve this transaction. We continue to strongly recommend that HBC shareholders vote for the take-private transaction,” Leith added.

He cited two “primary flaws” in the ISS report, contending, “ISS misunderstands the significance of the special committee’s determination to waive the standstill obligation of one of the continuing shareholders. The waiver of the standstill had no impact on the special committee’s negotiating leverage with the continuing shareholders as the other continuing shareholders already had sufficient voting power to block any alternative transaction.”

Leith also said, “ISS misunderstands the effect of the superior proposal construct, which requires that any alternative transaction proposal must be reasonably capable of completion in order to be a superior proposal. No board of directors, having concluded that an arrangement is in the best interests of the company, would terminate an arrangement agreement in order to enter into an alternative transaction which is not reasonably capable of completion. As the proposed privatization transaction is subject to majority of the minority approval, if holders of a majority of the shares held by minority shareholders oppose the transaction, it will not proceed.”

The special committee of the board of HBC has approved Baker’s bid and has rejected a rival bid from Catalyst Capital Group for $11 a share. Baker and his group said they are not interested in selling their shares nor would they raise their bid, after already raising it once previously. The group pointed out that it would be very difficult for Catalyst’s bid to be approved since they represent 57 percent of the shares of the company.

According to media reports, ISS indicated: “Given that significant defects have been identified with the sale process, shareholders cannot be confident they are receiving maximal available value for their shares.”

Though Baker and his group said Catalyst’s offer has defects and could not be accomplished, the proxy advisory firm said the “only defect” of the rival offer identified by HBC’s special committee was the opposition of the Baker-led group of continuing shareholders.