Hudson’s Bay Co. Launches Take-Private Bid — What This Means for Saks, HBC and Lord & Taylor

Hudson’s Bay Co. is pulling out of its European operations, as executive chairman Richard Baker seeks to take the company private with a cash bid valued at $1.7 billion Canadian dollars, or about $1.28 billion.

The Canada-based business has formed a special committee to review its take-private bid, with Baker and investors representing about 57% of the outstanding common shares of HBC. (Members of the shareholder group include WeWork Property Advisors, Rhône Capital LLC, Hanover Investments SA and Abrams Capital Management LP.)

In a statement, CEO Helena Foulkes said that the deal to retreat from Europe allows the retailer to “fully focus our resources on HBC’s North American operations, including our best growth opportunities — Saks Fifth Avenue and Hudson’s Bay.”

“While we continue to believe in HBC’s long-term potential, it has become clear that the significant challenges, risks and uncertainties facing HBC in the rapidly evolving retail environment are best addressed in a private market setting,” said Baker in a statement.

FN has reached out to HBC for comment.

Since Foulkes joined the company in February 2018, the retail group has sloughed off many of its less profitable businesses to focus on its top performer, Saks Fifth Avenue, and banner chain Hudson’s Bay. It sold flash sale site Gilt to Rue La La in June 2018, and announced in February that it would close its Home Outfitters chain in Canada and shutter up to 20 Saks Off Fifth locations. It also said last month that it was exploring “strategic alternatives” for its Lord & Taylor business, which could include a potential sale, joint venture or merger.

At $9.45 Canadian per share, the take-private bid would provide shareholders a 48% premium on HBC’s closing share price from Friday while giving the majority shareholders the chance to turn the business around without the pressures of the public market.

“We believe that improving HBC’s performance will require significant time and patient long-term capital that is better suited in a private company context without the emphasis on short-term results and returns,” Baker continued.

HBC isn’t the only retailer to pursue this strategy: The Nordstrom family offered to take the Seattle-based company private for approximately $8.4 billion in March 2018, but the bid was rejected by special committee of the retailer’s board, who said the offer was too low. The family group argued that the cash offer of $50 per share represented a premium of about 24% on the company’s stock price when it announced its intention to go private in June 2017. In the year since, the retailer has suffered from flagging sales at its full-price stores, which it has blamed on mistakes with its rewards program and women’s apparel merchandising. Its stock opened Monday at $31.91 per share.

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