Dec 12, 2019
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Hudson's Bay chairman gets Glass Lewis support for take-private bid

Dec 12, 2019

Hudson’s Bay CoChairman Richard Baker won the support of proxy advisory firm Glass Lewis for the takeover of the Canadian retailer, just days after a rival adviser recommended stakeholders vote against the plan.

The news is the latest in a months-long battle to take the Saks Fifth Avenue owner private by a consortium led by Baker for C$1.9 billion, or worth C$10.30 per share.

Institutional Shareholder Services Inc last week recommended shareholders to vote against Baker’s offer after the bid was topped by Toronto-based buyout firm Catalyst Capital Group Inc’s C$11 per share.

Glass Lewis in a report dated Dec. 10 said Hudson’s Bay’s stock could fall further in a difficult and competitive retail environment if the deal fails, and Baker’s offer seems the most viable at the moment.

“We simply see no viable path for the Catalyst proposal to achieve any of the requisite shareholder vote hurdles at this time,” Glass Lewis wrote in the report.

“We believe it would be nonsensical for the board to terminate the arrangement agreement ... simply for the opportunity to consider an alternative proposal that would ultimately stand no chance of being approved.”

Glass Lewis noted that the operating environment will likely remain challenging for the foreseeable future, forcing many retailers to close a large portion of their stores. The sector has already seen record store closings and prominent bankruptcies like Sears and Barneys in recent years.

The Baker-led consortium, which collectively owns 57% of Hudson’s Bay, includes private equity firm Rhone Capital LLC and office-space sharing start-up WeWork’s property arm.

A special committee set up by Hudson’s Bay rejected Catalyst Capital’s offer in November and stuck to the Baker-led group’s bid.

“Glass Lewis ignored all of the issues related to the creation of the Baker Group and buys into the threat that the take-under proposed by that group is the only option,” Gabriel de Alba, a partner and managing director at Catalyst, said on Wednesday.

Catalyst said it would seek a change in Hudson’s Bay’s board if it does “not act in the best interest of all shareholders.”

Ortelius Advisors, which earlier this month said it had filed a lawsuit against the retailer and Baker over his proposal, said on Wednesday it would vote against the privatization of the retailer.

The company faces a vote from minority shareholders to approve the deal on Dec. 17.

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