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Hudson’s Bay Shareholders Approve Privatization Plan

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More than 98% of Hudson’s Bay Company (HBC) shareholders voted to take the department store retailer private for a price of $11 (Canadian) per share in cash. The vote, held on Feb. 27, was followed by quick approval of the transaction by the Ontario Superior Court of Justice (Commercial List).

HBC, owner of its namesake Hudson’s Bay stores as well as Saks Fifth Avenue and Saks OFF 5TH, will become a private company owned by a group of current shareholders led by Richard Baker, Governor and Executive Chairman of HBC. For several years the retailer has been streamlining its portfolio: it sold Gilt Groupe to Rue La La for $250 million in June 2018, and sold Lord + Taylor to Le Tote for $99.5 million in August 2019.

Despite these cash-generating moves, HBC has continued to struggle: the retailer reported a 1.7% drop in comparable store sales for Q3 2019, with a 38.3% decrease in gross profit margin and net loss from continuing operations of $175 million (Canadian).

Baker told the Financial Post that the transaction gives liquidity to shareholders who wanted to cash out while removing the quarterly demands of shareholders. He added that the sale would enable the retailer to adopt software that will allow customers to buy goods online and choose a specific Hudson’s Bay store at which to pick them up.

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As a private company, HBC will continue its investments in online sales, one of the few bright spots in HBC’s financial results, along with upgrades to its nearly 250 brick-and-mortar stores.

The privatization deal is expected to close on March 3.

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