Saks Fifth Avenue owner Hudson’s Bay agrees to go private

Hudson’s Bay Company (HBC) will finally return to private hands. The board of directors of the Canadian department store group, that also owns Saks Fifth Avenue, agreed yesterday to a buyout by a consortium of investors led by its chairman, Richard Baker.

The deal values de retailer’s equity at 1.9 billion Canadian dollars (1.45 billion US dollars). The consortium offered to buy 43% of HBC it does not already own for 10.30 Canadian dollars per share, a 62% premium to the group’s share price before Baker made public its interest in acquiring the company last June. After the announcement Monday, HBC’s stock in Canada rose 7 percent to 10.11 dollars.

Although a special committee of independent directors has already greenlighted the buyout, for the deal to go through, a majority of the minority shares need to approve it. A shareholder vote on the privatization offer is expected in mid-December.

The deal values HBC at 1.45 billion US dollars

Among the reasons behind the deal are the fall of retail stock prices and the need the group has for more capital to be competitive and pay restructuring costs at stores being closed or sold off in North American and Europe. HBC is also pursuing licensing rights to the bankrupt Barneys New York.

HBC sales totalled 9.4 billion dollars for the year ended February 2. Comparable sales went down 0.2%, as compared to the previous year. The group’s net loss totalled 631 million dollars, while adjusted ebitda delivered a 30% increase, to 338 million dollars.  The group went public in 2012 with an initial public offering of 365 million Canadian dollars in the Toronto Stock Exchange.