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Minority Shareholders Win as Hudson’s Bay Chairman Raises Offer

Sandrine Rastello and Scott Deveau

(Bloomberg) -- Hudson’s Bay Co. Chairman Richard Baker raised his offer to take the struggling retailer private, handing a victory to minority shareholders including Catalyst Capital Group Inc. that fought to derail the original bid.

Hudson’s Bay said in a statement late Friday it agreed to a new bid by Baker and a group of allies, who together control the company. The offer was increased for a second time to C$11 ($8.46) a share from C$10.30. Baker’s first offer was for C$9.45 apiece in June.

The new take-private bid values the owner of Saks Fifth Avenue at about C$2 billion. Catalyst, a Toronto-based private equity firm that had waged a campaign against the agreement and convinced the regulator to delay the vote, agreed to support the new deal.

The raised offer “delivers significantly more value for all minority shareholders, well above the original proposal,” said Gabriel de Alba, managing director and partner of Catalyst, in a separate statement.

This “provides minority shareholders with compelling and immediate value and is supported by our largest minority shareholder,” said David Leith, the chairman of the board’s special committee formed last year to weigh in on the offer.

Catalyst, which owns a 17.5% stake in the retailer, was a substantial hurdle for the controlling shareholders to overcome. The Toronto-based firm’s stake amounts to about 32% of the minority shareholder votes, and its support now all-but-ensures the transaction will go through at a planned February vote.

Baker has said he wants to let the Canadian retailer attempt a turnaround outside the glare of public markets. While it has reduced debt after selling assets in Europe, the company is still struggling to boost sales at its eponymous chain in Canada, the oldest company in North America. Saks has also recently showed signs of weakening. The luxury retailer last month posted its first same-store sales decline in at least eight quarters.

The sweetened offer may further boost shares, which gained more than 20% this week after reports that Baker had approached minority shareholders about potentially raising the offer.

While the C$10.30-a-share offer was approved by the board in October, preliminary tallies showed the Baker group had fallen short of the necessary support from investors to proceed with the transaction, according to people familiar with the matter.

Catalyst, a private equity firm which is run by Newton Glassman, had made its own proposal at C$11 a share that was rejected by a special committee of the board because Baker’s group was adamant it wouldn’t tender its shares.

To contact the reporters on this story: Sandrine Rastello in Montreal at srastello@bloomberg.net;Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Sally Bakewell at sbakewell1@bloomberg.net, David Scanlan, Divya Balji

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