Private equity group criticizes the proposed private acquisition of Hudson's Bay Company

Hudson's Bay Co. to Go Private in Revised Deal

In a significant move, Hudson's Bay Co. has agreed to a revised take-private deal, ending years of internal battles and potentially providing a fresh start for the retail giant. The new offer, worth 10.30 Canadian dollars per share, represents a 62% premium over Hudson's Bay's most recent closing share price.

The deal, financed with debt and Hudson's Bay's existing cash resources, includes Richard Baker, Rhône Capital, WeWork Property Advisors, Hanover Investments, and Abrams Capital Management. The Canadian private equity firm Catalyst Capital Group, which owns more than 17% of shares, has registered its objection to the agreement.

Catalyst Capital Group, along with other shareholders holding approximately 28% of shares, intends to vote against the agreement. This opposition follows Catalyst's criticism of the previous offer, which Land & Buildings, an activist investor in Hudson's Bay, also panned as "woefully inadequate."

For years, Land & Buildings has been advocating for Hudson's Bay to sell off real estate for cash and improve its retail business. This strategy seems to be reflected in the new offer, as the company plans to use the proceeds to reduce debt and invest in its core retail operations.

However, Hudson's Bay's luxury Saks unit, a leading part of the retailer's go-forward strategy, faces pricing and margin pressure. The company's losses have widened this year as it closes stores, sells assets, and tries to improve its remaining business.

The deal is subject to closing conditions, including shareholder approval and court sign-offs. In June, another firm took on a large stake to block the bid. The identity of this firm, along with the names of the other investors in the takeover group, remains undisclosed.

Hudson's Bay traces its roots back to the 17th century fur trade. The company has significant cash obligations, including from the wind down of its Netherland operations and rent for several banners. Despite these challenges, the company still holds the iconic Lord & Taylor brand, which it sold to fashion rental specialist Le Tote but continues to be responsible for the chain's rent payments.

The news of the take-private deal comes as a potential turning point for Hudson's Bay. Going private could provide the company with the financial flexibility and strategic agility needed to navigate the complex retail landscape and position itself for long-term success. However, the opposition from significant shareholders, such as Catalyst Capital Group, raises questions about the future of the deal and the direction of the company.

Private equity group criticizes the proposed private acquisition of Hudson's Bay Company