A View of the Hudson's Bay Company Head Office and Main Store in Toronto Canada 15 June 2015 Hudson's Bay Announced on 15 June That It Has Deal to Buy the Kaufhof Chain of Department Stores in Germany Canada TorontoCanada Hudsons Bay Company - Jun 2015

Hudson’s Bay Co. isn’t about to go private, sources said Sunday.

The bid by Richard Baker, HBC’s executive chairman, and key shareholders collectively owning 57 percent of the shares, apparently hasn’t received enough votes from the minority shareholders for the bid to go through.

The group, known as the continuing shareholders, offered $10.30 Canadian to buy up the remaining 43 percent of the company and would need a majority of the minority shares to vote in favor of the bid for it to be approved.

“It’s basically Nordstrom all over again,” said one source close to HBC, referring to last year when the Nordstrom family proposed taking Nordstrom Inc. private but faced opposition after the bid was considered too low.

“The group is contemplating pulling its bid just like Nordstrom,” said the source.

There was no comment from HBC or the continuing shareholders on Sunday.

”Hedge funds [messed] up a great  deal for the shareholders,” said a source close to the situation. “It represented about a 68 percent premium to what the stock was trading at the day before the group made its announcement,” at $10.30. Originally, the group had a lower bid but raised it.

A shareholder meeting for a final official tally of the voting on the bid by Baker and his group had been scheduled for this Tuesday in Toronto where HBC is based, but has been cancelled, according to the source close to the situation.

Baker and his group hoped to take the company private to no longer be bound by the quarterly pressures of the public markets for short term gains so the company could focus on shoring up the retail operations and possibly monetize and redevelop some of its real estate holdings. The bid by Baker and his group did get the  approval of the special committee of the board of directors and some thumbs up from two leading outside securities advisory firms. Baker’s group in the last few weeks had been vigorously campaign to win over votes from minority shareholders, contending that the  offer was fair, represented a good premium over what the stock had been trading for prior to his bid and that it likely wouldn’t gain any value amid the challenging retail environment. In addition, HBC, which operates Saks Fifth Avenue, Saks Off5th and Hudson’s Bay, has been suffering losses and showed an increased loss last quarter.

However, there was opposition to the Baker bid from Catalyst Capital Group, a Canadian firm investing in distressed securities and a minority stakeholder in HBC that proposed buying all of HBC for $11 Canadian a share. An activist shareholder, Land & Buildings, has also opposed the bid. They both view it as unfair and undervaluing HBC.

Also, the Ontario Securities Commission, the equivalent of the Securities and Excahnge Commission in the U.S., has been examining the offer from Baker’s group.

Baker and his group have no interest in selling HBC and have said that the only deal they would consider is their own, and that the only alternative is to keep HBC as a public company.

For the past two years, HBC has been streamlining it’s portfolio, including selling off its European retail and real estate holdings in Germany; selling Lord &Taylor and Gilt Groupe, as well as closing some retail doors.

 

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