The HBC Continuing Shareholders Highlight the Compelling Reasons for Supporting the Proposed Take Private of Hudson’s Bay Company

Transaction Offers Immediate and Certain Cash Value to Minority Shareholders at a Substantial Premium

NEW YORK--()--A group of shareholders of Hudson’s Bay Company (TSX: HBC) (“HBC” or the “Company”), who collectively own approximately 57% of the outstanding common shares of HBC on an as-converted basis (collectively the “Continuing Shareholders”), believe there are compelling reasons for HBC’s minority shareholders to support the proposed arrangement to take HBC private for $10.30 per share in cash.

The Continuing Shareholders urge HBC minority shareholders to consider the following:

  • The all-cash offer at $10.30 per share delivers immediate value to HBC minority shareholders at a 62% premium. $10.30 per share represents a premium of approximately 62% to HBC’s closing share price on the Toronto Stock Exchange of $6.37 per share on June 7, 2019 – the last trading day prior to the announcement of the Continuing Shareholders’ initial proposal – and a premium of approximately 52% to the 20-day average closing share price on that same date. Notably, the Ontario Teachers’ Pension Plan, one of Canada’s most sophisticated institutional investors, sold the 18 million shares of HBC that it owned for $9.45 per share in June, soon after the Continuing Shareholders made their initial proposal.
  • The all-cash offer at $10.30 per share represents the Continuing Shareholders’ best and final offer. The Continuing Shareholders engaged in extensive negotiations with the Special Committee and its financial and legal advisors on pricing and other terms of the transaction. The offer price of $10.30 per share represents an increase of 9% over the Continuing Shareholders’ initial proposal on June 10, 2019 of $9.45 per share. The $10.30 per share in cash offer and the terms of the transaction represent the Continuing Shareholders’ best and final offer.
  • The retail environment, especially for department stores, is deteriorating and uncertain. The retail landscape is experiencing unprecedented change. Consumers have shifted a significant portion of their buying to online and away from department stores. Brick-and-mortar retailers, especially department stores, have had to reduce their physical footprint and adapt their business models as consumer shopping preferences have evolved. The industry has experienced mass store closures and several high-profile bankruptcies in both the U.S. and Canada, which include Target (Canada), Toys “R” Us, Sears, Gymboree, Forever 21 and Barneys New York.
  • Despite HBC’s best efforts to adapt, HBC’s stock price and valuation continues to reflect ongoing risk and uncertainty. HBC has proactively sought to shift its business and strategy by investing heavily to grow its e-commerce business, adjusting its marketing and assortments and redeveloping or renovating its stores to match evolving consumer trends and habits. Since 2015, the Company has also sold or closed non-core business units, sold or monetized real estate in both North America and Europe and received $4.1 billion in proceeds to retire debt, fund capital investments, operating losses and the operations of the business. Despite these actions, HBC’s stock declined more than 40% in the twelve months prior to the Continuing Shareholders’ initial proposal, in line with the performance of other department store stocks.
  • Execution of HBC’s strategic plan requires significant additional capital and patience to be successful. The Continuing Shareholders are committed to HBC, its brands, suppliers, customers and outstanding associates. Improving HBC’s performance will require patience and dedicated long-term-focused investors. Significant investment will be required because of negative operating cash flows, as well as ongoing maintenance and capital projects to stay relevant for consumers. After the close of the transaction, the Continuing Shareholders intend to make substantial additional capital investments and are prepared to shoulder significant retail market uncertainty, risk and volatility. This profile of risk and volatility is less attractive to the public markets, where there is greater focus on near-term performance.
  • HBC’s real estate has been valued at $8.75 per share by two highly respected and independent real estate appraisal firms. The Special Committee engaged both CBRE and Cushman & Wakefield, two leading real estate appraisal firms, to value HBC’s real estate assets. Those independent firms produced 79 individual property appraisals, based on current market conditions and taking into consideration potential alternative uses of the real estate. These appraisal reports are available for review on HBC’s investor relations website. The Saks Fifth Avenue flagship store was extensively studied and evaluated in light of deteriorating rents in New York City for premium retail real estate, as well as for potential alternative uses of the building, including office and residential use. The real estate appraisers valued the pro forma share of HBC’s real estate at $8.75 per diluted share, which is inflated by some above-market rents, and excludes the impact of transaction-related fees and expenses, which would reduce net proceeds to the Company upon a sale.
  • The transaction transfers the liabilities and risks facing HBC’s business to the Continuing Shareholders, including $825 million of “Dead Rent” expense. Through the all-cash offer, the Minority Shareholders receive immediate, compelling and certain value for their shares while the Continuing Shareholders assume the Company’s liabilities and risks (and potential for upside) of future business performance in an uncertain retail environment.
  • The Continuing Shareholders are buyers, not sellers, of HBC. The Continuing Shareholders remain uninterested in an alternative transaction that would result in the sale of their interest in HBC or the acquisition by a third party of HBC or any of its material assets.
  • None of the Continuing Shareholders will receive cash proceeds from the transaction. Under the agreement, the Continuing Shareholders will contribute 100% of their equity into the transaction and will receive no cash proceeds.
  • After an extensive strategic review process, the Special Committee did not identify any alternative that was more attractive than the proposed transaction. As stated in HBC’s Management Information Circular, the Special Committee of HBC’s Board of Directors, with the assistance of its independent financial and legal advisors, conducted a thorough review of other alternatives available to the Company, including the return of capital to shareholders. During this time, no other transaction was put forth that was more attractive than the take private transaction proposed by the Continuing Shareholders.

If the transaction does not receive support from the Minority Shareholders, all shareholders will face the risks and volatility posed by the difficult retail and retail real estate environment. Further, if HBC were to remain a public company, given the continued challenging environment for retail stocks, the Continuing Shareholders expect HBC’s stock price would fall meaningfully, potentially to levels comparable to the price it was trading prior to the announcement of the Continuing Shareholders’ initial proposal.

HBC’s Circular states that HBC’s Board, having received the unanimous recommendation of the Special Committee, determined that the arrangement is in the best interests of HBC and fair to the Minority Shareholders. The HBC Board has recommended that Minority Shareholders vote in favor of the arrangement at the special meeting of shareholders on December 17, 2019.

The Continuing Shareholders include 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.

For further information on the arrangement to take HBC private, please refer to the Company’s Management Information Circular dated November 14, 2019 and related proxy materials. A copy of the Management Information Circular and related proxy materials may be found under the Company’s profile on SEDAR at and on HBC’s website at

Forward-Looking Statements

Certain statements made in this news release are forward-looking statements within the meaning of applicable securities laws, including, but not limited to, statements with respect to: the arrangement to take HBC private; the belief that HBC’s stock price would fall to previous levels if the arrangement to take HBC private is not completed; the Company’s forward-looking outlook and capital requirements; the risk and challenges facing the Company; and other statements that are not historical facts. Often but not always, forward-looking statements can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “believe”, “estimate”, “plan”, “could”, “should”, “would”, “outlook”, “forecast”, “anticipate”, “foresee”, “continue” or the negative of these terms or variations of them or similar terminology.

Although the Continuing Shareholders believe that the forward-looking statements in this news release are based on information and assumptions that are current, reasonable and complete, these statements are by their nature subject to a number of factors that could cause actual results to differ materially from their expectations and plans as set forth in such forward-looking statements, including, without limitation, the following factors, many of which are beyond the Continuing Shareholders’ control and the effects of which can be difficult to predict: (a) the failure to obtain or satisfy, in a timely manner or otherwise, required shareholder and regulatory approvals and other conditions of closing necessary to complete the proposed arrangement to take HBC private; and (b) the risks and challenges facing the Company, including those set forth in the "Risk Factors" section of the Company’s Annual Information Form dated May 3, 2019, those set forth in the “Risk Factors” section of the Company’s Management Information Circular dated November 14, 2019 as well as the Company’s other public filings, available at and at; and (c) other risks and/or factors beyond its control which could have a material adverse effect on the Company or the ability to consummate the arrangement to take HBC private.

The forward-looking statements contained in this news release describe the Continuing Shareholders’ expectations at the date of this news release and, accordingly, are subject to change after such date. Except as may be required by applicable Canadian securities laws, the Continuing Shareholders do not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.


Matthew Sherman / Kelly Sullivan / Annabelle Rinehart / Kara Brickman
Joele Frank, Wilkinson Brimmer Katcher, (212) 355-4449


Matthew Sherman / Kelly Sullivan / Annabelle Rinehart / Kara Brickman
Joele Frank, Wilkinson Brimmer Katcher, (212) 355-4449