Hudson’s Bay Co.’s Plan to Go Private Gets Shareholder Opposition

Hudson’s Bay Co.’s bid to go private has hit a roadblock.

The Canadian company has received opposition from shareholder Catalyst Capital Group Inc., which issued a statement indicating its intention to vote against executive chairman Richard Baker’s proposal to take the company private.

In a statement released yesterday, the private equity investment firm — along with other minority shareholders — said that it had begun to formally review steps to take action against HBC’s proposal. Catalyst and the investors altogether represent roughly 28.24% of the company’s total common shares outstanding.

“The agreement that the company entered into is so fundamentally conflicted that it shows the amount of leverage Richard Baker has over the board and management,” Catalyst managing director and partner Gabriel de Alba wrote on behalf of other shareholders. “It is unconscionable that the board would use shareholders’ funds in a severely undervalued share buyback with massive tax leakage and dress it up as a premium transaction.”

FN has reached out to HBC for comment.

Less than two weeks ago, the retail business company announced that a group of shareholders — including Baker, Rhône Capital LLC and WeWork Property Advisors — agreed to pay CA$10.30 (or $7.84) per share in cash for the remaining shares it doesn’t already own. As it stands, the buyer group collectively holds 57% of the company’s common shares.

Baker’s offer was 9% higher than the initial bid of CA$9.45 (or $7.22) per share made on June 10, when HBC formed a special committee to review its take-private bid and announced that it would pull out of its European operations.

In its statement, Catalyst suggested that the board either “demand that Richard Baker release other members of the Baker Group to consider other options” or “allow the Baker agreement to expire and run a true-sale process.” It added that it was prepared to work toward an offer to acquire HBC at terms “financially superior” to the current bid.

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