FINALLY: Hudson’s Bay Company Reaches Agreement to go Private

Posted on 01/09/2020

Brampton, Canada’s Hudson’s Bay Company shares saw a 10% rise on takeover news. The company was founded in 1670 with a royal charter and a monopoly granted by the then-king of England. It made fortunes in the fur trade for over 300 years before dropping the fur business entirely in 1991. Now a fast fashion and home good retailer, Hudson’s Bay chairman Richard Baker led a group that offered CAD$ 11 to override shareholder Catalyst Capital’s previous objections that the price offered to take the historic company was too low. With the deal, Hudson’s Bay Company is valued at CAD$ 2 billion. The takeover isn’t set in stone yet. Baker and his group need 75% of shareholders to vote for the deal in February 2020.

Like many North American retailers, such as Nordstrom and Macy’s, Hudson’s Bay has been closing its underperforming stores to lower costs.

One year ago in January 2019, Ontario Teachers’ Pension Plan accepted a deal to take a CAD$ 110 million dollar loss on its stake in Hudson’s Bay. Ontario Teachers’ Pension provided US$ 500 million of the US$ 2.9 billion in capital Hudson’s Bay needed to purchase Sak’s Fifth Avenue in 2013. Baker was eager to purchase the shares from the pension, saying at the time “I am very pleased to increase my significant ownership in HBC and further demonstrate my commitment to the company.” Baker’s team includes Rhone Capital, WeWork Property Advisors, the Abu Dhabi Investment Council (ADIC), and Abrams Capital Management. ADIC holds 17.7% of the company. ADIC is now part of Mubadala Investment Company.

Real Estate

Hudson’s Bay Company has major investments in real estate joint ventures. Hudson’s Bay Company has partnered with Simon Property Group Inc. in the HBS Joint Venture, which owns properties in the United States. In Canada, it has partnered with RioCan Real Estate Investment Trust in the RioCan-HBC Joint Venture.

Keywords: Ontario Teachers Pension Plan.

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