The success of Hudson's Bay Co Executive Chairman Richard Baker's $1.3...
- The success of Hudson’s Bay Co Executive Chairman Richard Baker’s $1.3 billion bid to take the department store operator private hinges on whether an independent valuator will view the company more as a retailer and less as a real estate owner, corporate governance experts and analysts said.
Baker’s buyout consortium, which already owns 57% of Hudson’s Bay, has made a C$9.45 per share offer for the remainder of the Canadian company, a 48% premium to where the stock was trading before the announcement. “There is judgment to be exercised on the valuation, which can always be challenging,” said Catherine McCall, the executive director of the Canadian Coalition for Good Governance, an organization representing institutional shareholders in Canadian public companies.
Hudson’s Bay’s most recent public estimate for the value of its real estate was in September 2018, when CEO Helena Foulkes pegged it at $28 per share. Baker has offered about a third of that because he argues that the company would have to all but liquidate to achieve all the real estate value. The methodology Toronto-Dominion Bank uses to value the bid for Hudson’s Bay will be key to the outcome and will be scrutinized heavily by shareholders. The bank will likely be assessing how comparable companies’ shares trade, research similar deals and consider how much a financial buyer like a private equity firm would pay, said Andrey Golubov, a professor of finance at the University of Toronto.Hudson’s Bay declined to comment, as did a spokesman for Baker’s buyout consortium.
A majority of the shareholders who are not affiliated with the buyout consortium have to vote for it, accounting for about 21.5 percent of the company’s shareholder base. Opponents could still challenge the deal in court when the company seeks approval for it before a judge under the Canada Business Corporations Act.
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