Equity Firm Angles to Block Buyout of Hudson’s Bay

July 23, 2019, 6:36 PM UTC

Hudson’s Bay Co., the flagging parent of Saks Fifth Avenue, has a suitor countering a proposed insider buyout led by the company’s chairman.

Private equity firm Catalyst Capital Group Inc. is offering to buy up to C$150 million ($114 million) worth of shares of Hudson’s as it builds a stake in the Canadian retailer.

The Toronto-based firm said in a statement Monday it was prepared to pay C$10.11 per share in cash for up to roughly 14.8 million common shares. That’s a 7% premium on the C$9.45 a share Hudson’s chairman, Richard Baker, and his partners offered last month to take the company private.

Hudson’s Bay has yet to formally respond to Baker’s take-private offer. Representatives for the company and its chairman weren’t immediately available for comment.

Catalyst, founded by businessman Newton Glassman, said it planned to oppose the buyout and request the company’s special committee explore all alternatives maximizing value for shareholders. Catalyst also bought a significant portion of a block of Hudson’s Bay shares sold last month by Ontario Teachers’ Pension Plan Board, according to people familiar with the matter.

It’s unclear how big a stake Catalyst owns in the retailer. The private-equity firm said its offer would remain in place until 5 p.m., Aug. 16.

“Catalyst believes that the insider buyout proposal greatly undervalues the company across each of its real estate, retail, and iconic brand attributes,” the firm said in the statement. “The special committee has a duty to explore any and all transactions that have the potential to maximize value for all shareholders over the near or long-term.”

The private equity firm isn’t the only one opposing the take-private transaction. Activist investor Jonathan Litt also has called the chairman and his group’s offer “woefully inadequate.”

As reported, Hudson’s CEO Helena Foulkes’ has tried an everything-is-on-the-table approach to turn Hudson’s Bay around. The company has already divested flash-sale website Gilt, slashed costs by cutting jobs, unloaded a minority stake to Rhone Capital, and sold its iconic Lord & Taylor flagship building in Manhattan to WeWork for $850 million. But it’s been to no avail.

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