Land and Buildings Investment Management LLC is part of a group of minority shareholders intent on blocking a deal to take Hudson’s Bay Co. private, a source confirmed on Friday.
The U.S.-based fund, run by longtime activist shareholder Jonathan Litt, has been publicly critical of Richard Baker, HBC’s executive chairman, who is leading the group of majority shareholders pushing to take the ailing retailer off the market.
On Thursday, the private equity firm Catalyst Capital Group Inc., which has also been critical of Baker’s proposal, announced it had enough support to spike the $1.1-billion deal in a vote next month. But it wasn’t immediately clear who else was part of the dissident group.
In its statement, Catalyst signalled it was aligned with a group of dissident shareholders who represented 10.75 per cent of HBC’s common shares — along with Catalyst’s 17.49 per cent stake, that’s a majority of the minority shareholders needed to decide the vote.
“Catalyst and other shareholders representing approximately 28.24 per cent of the common shares of HBC intend to vote against the agreement, representing a majority of the minority shareholders,” the statement said.
It’s not clear how much Land and Buildings owns, though they’re certainly below the 10 per cent threshold that would obligate them to reveal their position. That means there are other dissidents involved in Catalyst’s bloc.
Since Baker’s group first proposed the deal in June, Litt has derided it as “woefully inadequate” and “dead on arrival,” calling for Baker’s removal.
But Litt hasn’t spoken publicly since HBC’s board of directors announced earlier this month that it had taken the recommendation of its special committee and unanimously approved a sweetened offer from Baker’s group. The new offer boosts the share price to $10.30, up from the initial proposal of $9.45 that was floated in June. A source close to Land and Buildings said the firm continues to see the deal as unfair to shareholders.
Catalyst managed to significantly increase its stake in HBC in August, when it issued an unsolicited offer to purchase HBC shares at $10.11 per share.
“The agreement that the Company entered into is so fundamentally conflicted, that it shows the amount of leverage Richard Baker has over the Board and Management,” Catalyst managing director Gabriel de Alba said in the statement. “It is unconscionable that the Board would use shareholders’ funds in a severely undervalued share buyback with massive tax leakage and dress it up as a premium transaction.”
