Hudson’s Bay Co. (HBC) has entered into a definitive agreement to be taken private by a group of shareholders. The shareholders collectively own approximately 57% of the retail group’s common shares, and will purchase the remainder at $10.30 CAD per share, a premium of approximately 62% over HBC’s closing share price on the Toronto Stock Exchange on June 7, 2019, which was the last day before the proposal was initially made.
The shareholder group is comprised of individuals and entities related to or affiliated with:
- Richard A. Baker, Governor and Executive Chairman of HBC;
- Rhône Capital L.L.C.;
- WeWork Property Advisors;
- Hanover Investments (Luxembourg) S.A.; and
- Abrams Capital Management, L.P.
Going private could position HBC for a stronger turnaround effort by eliminating the need to provide shareholders with short-term gains. The shareholder group noted that redevelopment of HBC’s real estate portfolio could take years and require significant capital expenditures, and would not provide additional value in the foreseeable future.
In August, HBC announced that it had entered into a deal to sell the storied Lord & Taylor franchise to fashion rental service Le Tote for $99.5 million CAD. But the deal includes a unique condition: HBC will retain ownership of all owned and ground-leased real estate assets related to Lord & Taylor and will maintain responsibility for rent owed by Lord & Taylor stores operated by Le Tote before the companies reassess the real estate in 2021.
Beyond the go-private decision, HBC’s turnaround effort also includes licensing the Barneys New York brand and web site from Authentic Brands Group and investment bank B. Riley Financial, which plan to acquire the struggling luxury retailer. The retailer also sold its remaining European real estate and retail joint ventures to its partner, SIGNA Retail, for approximately $1.1 billion, which will let the company focus on improving its North American business.