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Saks Parent HBC to Exit German Operations, May Go Private

A sign that reads ÒSaks Fifth AvenueÓ

Saks Fifth Avenue and Lord & Taylor parent Hudson’s Bay Company is planning to exit from Europe and may go private in coming months, the company announced last week.

The company, which also owns Hudson’s Bay department stores in Canada and Saks Off Fifth, said that its Board of Directors has formed a Special Committee of independent directors to review the June 10, 2019 proposal from a group of HBC shareholders for the privatization of the company at a price of C$9.45 per share, payable in cash.

The group of HBC shareholders submitting the proposal includes individuals and entities related to, or affiliated with, Richard A. Baker, governor and executive chairman of HBC; Rhône Capital L.L.C.; WeWork Property Advisors; Hanover Investments (Luxembourg) S.A.; and Abrams Capital Management, L.P., which collectively own approximately 57% of the outstanding common shares of HBC.

Founded in 1670, HBC is the oldest company in North America, with more than 300 stores worldwide. Baker, a real estate developer who acquired Lord & Taylor in 2006, purchased Hudson’s Bay in 2012 and Saks in 2013. In May, the company announced that it was pursuing strategic alternatives for Lord & Taylor, including a possible sale or merger.

HBC also plans to exit its German businesses, selling its remaining stake in its German real estate joint venture and sell its related retail joint venture to partner SIGNA for $1.5 billion. The transaction is expected to close in fall 2019. As part of the agreement, HBC assumes ownership of its Netherlands retail business, and will undertake cost-cutting measures including store closures as it examines options for that business.

“This agreement is an exciting milestone for HBC as it will deliver important financial and strategic benefits. Financially, it provides us with the best opportunity to capitalize on our German real estate and allows us to further strengthen our balance sheet. Strategically, we will be able to fully focus our resources on HBC’s North American operations, including our best growth opportunities – Saks Fifth Avenue and Hudson’s Bay,” said Helena Foulkes, CEO of HBC. “This transaction is another bold action that unlocks the value of our real estate and demonstrates our resolve to creating a stronger, more capable HBC.”

HBC had entered the European market with the acquisition of Galeria Holding, parent of German department store Kaufhof in 2015, then opening its first Hudson’s Bay store in the Netherlands in 2017. But none of the European ventures proved successful, and activist investor Land & Buildings Investment Management has pushed the company to monetize its real estate.

 

 

 

 

 

 

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