NEW YORK--(BUSINESS WIRE)--Ortelius Advisors, L.P. (together with its affiliates, "Ortelius" or “we”) announced today that it will vote against the proposed privatization (the “Bid”) of Hudson’s Bay Company (TSX: HBC) (“Hudson’s Bay,” “HBC” or the "Company”) by a consortium (the “Consortium”) led by Richard A. Baker. Ortelius also commented on various aspects of the update to HBC’s information circular (the “Update”) issued by the Special Committee just prior to midnight on Friday, December 6, 2019. The Update provides additional important information with respect to the Bid, including information for the period between late February 2019 and March 27, 2019.
Ortelius believes that instead of clarifying deficiencies in the circular, the Special Committee’s Update has raised additional serious concerns regarding Mr. Baker’s involvement in the negotiation of HBC’s sale of interests in its European real estate and retail joint ventures to SIGNA for CAD$1.5 billion (the “SIGNA Transaction”), while at the same time considering and discussing a potential insider bid for HBC with members of the Consortium.
Peter DeSorcy, Managing Member of Ortelius Advisors, L.P., said, “The Special Committee’s update just reinforces our decision to vote against Richard Baker’s insider bid. There is a lot more troubling information in the release, which raises a whole new set of additional questions.”
The Update discloses that “around late February 2019, representatives of HBC, including Mr. Baker and Mr. Putnam, commenced exploratory discussions with representatives of SIGNA about a potential sale to SIGNA of HBC’s remaining 50% interest in its European real estate...” Ortelius believes it is important to note that the Update discloses that shortly after those conversations, Mr. Baker also commenced exploratory discussions with members of the Consortium “as to whether proceeds from the potential SIGNA Transactions could provide a portion of the financing for a potential privatization transaction involving HBC...”
The Update discloses that Mr. Baker received consent from HBC to share certain confidential information with members of the Consortium on or about March 25, 2019. The Update does not indicate whether Mr. Baker received consent prior to such date. The Update additionally notes that it was not until May 31, 2019 that the Special Committee established “guidelines for directors, officers and management in view of the potential involvement of certain directors and officers of the Company in a privatization proposal.”
DeSorcy further added, “We continue to believe that Richard Baker’s duties as Governor and Executive Chairman of Hudson’s Bay Company were inexorably compromised once he sought to buy the company in the spring of 2017. The additional information released by the Special Committee raises more issues about Mr. Baker’s involvement in the negotiations and sale of HBC’s European assets as well as his interest to buy the company at the same time. Why did the Special Committee not establish procedures much sooner than it did?”
Lastly, the Update discloses that the Special Committee, on April 30, 2019, and more than a month prior to the announcement of the bid, “…discussed the potential timing of the announcement of a privatization proposal in relation to the announcement of the SIGNA Transactions, including the advantages and disadvantages of the privatization proposal being announced at the same time as the announcement of the SIGNA Transactions or at a different time.” Ultimately, HBC announced the SIGNA Transaction on June 10, 2019, pre-market. Five minutes later, the Consortium announced its Bid.
DeSorcy concluded, “We contend that Mr. Baker knew that coupling these transactions would impose an artificial ceiling on the stock price. It is incredulous that the Special Committee could reasonably determine that near simultaneous announcements would maximize shareholder value for minority investors. Indeed, shares rose just a fraction of that warranted by the SIGNA transaction alone.”
On December 6, 2019, Ortelius announced that it had filed a lawsuit in the Ontario Superior Court of Justice against HBC, Richard A. Baker and Rupert Acquisition LLC, in response to what Ortelius views as a concerted effort to disenfranchise non-insider shareholders and oppress the value of HBC’s shares.
About Ortelius Advisors, L.P.
Ortelius is a research-intensive, fundamental-based, activist-oriented alternative investment management firm focused on event-driven opportunities. Founded in 2015 by Peter DeSorcy and H.R.H. Prince Pavlos, the asset manager is based in New York City.