Richard A. Baker has an appetite for a greater share of Hudson’s Bay and is willing to pay a premium to get it.
An entity controlled by Baker called Rupert of the Rhine LLC has entered into an agreement to acquire 18 million common shares, or 10 percent, of Hudson’s Bay Co. from Ontario Ltd., a wholly owned subsidiary of Ontario Teachers’ Pension Plan Board.
Baker and his partners will pay $9.45 per share in Canadian dollars. The stock currently trades at $7.35.
“I am very pleased to increase my significant ownership in HBC and further demonstrate my commitment to the company,” said Baker, governor and executive chairman of HBC. “Ontario Teachers’ Pension Plan has been a valued partner since 2013, and I thank them for their support through their investment period.”
Baker and his partners will now control approximately 70 percent of the Hudson Bay Co.
The closing of the acquisition of the purchased shares is expected to occur no later than in six months, and is subject to customary closing conditions.
The purchased shares represent approximately 9.76 percent of the issued and outstanding common shares on a non-diluted basis and 7.54 percent of the issued and outstanding common shares.
HBC’s banners across North America and Europe include Saks Fifth Avenue; Hudson’s Bay; Lord & Taylor; Saks Off 5th; Galeria Kaufhof, the leading department store group in Germany, and Belgium’s only department store group, Galeria Inno.
In November, HBC completed the deal to combine the retail operations of HBC Europe and Signa Group’s Karstadt and the formation of the companies’ real estate venture.
HBC has sold off Gilt and is closing some Lord & Taylor stores, with the intention to shutter up to 10 stores through 2019. In fact, the Manhattan flagship of Lord & Taylor closed Wednesday after 104 years in that location. The plan is for WeWork to buy the flagship site for $850 million and establish its global headquarters there. HBC intends to use the net proceeds from the deposit and sale of the Lord & Taylor Fifth Avenue building to reduce indebtedness under its asset-based revolving facility and for general corporate purposes. That transaction is expected to close by the end of this month. HBC is also closing its Saks women’s store at Brookfield Place in Manhattan early this month.
As reported in December, HBC’s net losses for the third quarter widened to 124 million from 116 million Canadian dollars in the prior year. Adjusted earnings before interest, taxes, depreciation and amortization increased to 63 million from 40 million Canadian dollars, driven by sales growth and improved gross margin and expense rates. Sales rose 5.6 percent to $2.2 billion. Comparable sales rose 2.9 percent.