A vocal Hudson’s Bay Co. shareholder is calling for the removal of board chairman Richard Baker if his $1-billion bid to take the company private fails.
Land & Buildings Investment Management, which holds an undisclosed minority stake in the national retailer, says it met with a committee of HBC independent directors and supports its decision that a $9.45-per-share buyout bid offered by a Baker-led group of the company’s largest shareholders is unacceptable.
The U.S. hedge fund says it believes that Baker has had a number of missteps that demonstrate he should be removed from the board, including what it called a threat of stock price depreciation to minority shareholders if his bid is rejected.
It adds that if his bid is unsuccessful, it will requisition a special shareholder meeting to remove him and elect an unnamed former executive with deep knowledge of the company in his place.
Land & Buildings says in an open letter to other shareholders that Baker’s bid shows his interests are not aligned with those of minority shareholders.
Baker’s group declined comment, but has said the group’s offer provides an opportunity for all minority shareholders to sell their shares to patient investors able to address the “difficult challenges” that HBC faces.
He has alleged there is “a real and significant risk that HBC’s stock price falls back to levels comparable to where the stock was trading prior to the announcement of our privatization proposal” if there’s no offer for the full company.
However, Land & Buildings said Baker’s approach has demonstrated a conflict of interest and that he should not continue on as a director.
“All of this unnecessary distraction and cost was for an offer that Baker must have always known was dead on arrival,” Land & Building founder Jonathan Litt said in a letter released Thursday.
HBC, which owns the Saks Fifth Avenue, Hudson’s Bay, Lord & Taylor and Saks OFF 5th retail brands, has also received an unsolicited offer from Catalyst Capital Group Inc., which is seeking to buy up to 19.8 million shares, representing about 10.75 per cent of outstanding shares, at $10.11 each, for a total bid value of $200 million. The Catalyst offer remains open until Aug. 16.
Catalyst has said the Baker group’s warning of a future collapse in HBC’s stock price is “fear mongering” that omits the value to be derived from selling HBC’s assets in Germany, in a deal announced the same day as its takeover offer.
HBC has formed a special committee of independent directors to review the privatization bid and provide shareholders with a recommendation. The committee recently retained an independent valuator, advisers and legal counsel to help with the process, and HBC said at the time that it does not plan to disclose any more developments about the committee’s evaluation unless it becomes appropriate or required.
The special committee said earlier this month that the two offers aren’t directly comparable because Catalyst’s bid for a minority stake doesn’t provide all of the regulatory protections required with a full takeover bid like the one from the shareholders group.
Land & Buildings has long been pushing for the company to sell its real estate portfolio and said, in addition to removing Baker, it would also push to sell properties and return the money to shareholders, which it believes would result in a better return than the Baker-led bid.
“The $1.5 billion of Europe sale proceeds that is expected to close in the coming months alone equates to over $8 of value per common HBC share, almost equal to the $9.45 proposal alone without any value being realized from the company’s other vast real estate holdings and retail businesses,” it said.
The Canadian Press