Hudson’s Bay rejects new takeover bid

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Hudson’s Bay rejects new takeover bid

By Marianne Wilson - 12/03/2019

The Catalyst Capital Group Inc.’s unsolicited bid for Hudson’s Bay Co. has been turned down.

The special committee of the department store giant, whose holdings include Saks Fifth Avenue, said that the bid from Catalyst is not “superior” to an agreed-upon deal with a consortium led by Hudson’s executive chairman Richard Baker. The committee said it continued to recommend that minority shareholders vote for the special resolution approving the offer from the consortium.
Last week, Catalyst, which owns about 17.5% of Hudson’s Bay, made an offer to buy Hudson’s Bay for C$11-per-share (US$8.29 per share) in deal that valued the retailer at C$2.03 billion ($1.53 billion).  The offer presented a challenge to an already agreed upon offer of C$1.9 billion ($1.5 billion) from the Baker-led group, which collectively owns 57% of the company’s shares.

Catalyst said in a statement that it filed for a hearing with the Ontario Securities Commission, seeking to prohibit the Baker group transaction and postpone the Dec. 17 vote. The Toronto-based investment firm is urging shareholders to vote against the Baker offer, saying it undervalues Hudson’s Bay. 

The Baker group on Tuesday shot back at Catalyst in a letter to Hudson’s special committe, calling the offer an “illusory” bid that would leave the retailer with a big debt load.

“Catalyst’s reckless financing plans would swiftly add the company to the long list of retailers that have been forced to close their doors, shed jobs and impact pensioners,” the letter stated. “Indeed, we question how the board or any financing source could ever be satisfied with the solvency of the company under Catalyst’s highly levered capital structure, which appears to be approximately 90% debt financed.”

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