Shareholders are Encouraged to Vote FOR the
Transaction Before the Proxy Voting Deadline of 10:00 am ET on
February 25, 2020
Hudson's Bay Company (TSX: HBC) ("HBC" or the “Company”) today
announced that proxy advisory firms Institutional Shareholder
Services (“ISS”), Glass Lewis, and Egan-Jones have all recommended
that HBC shareholders vote “FOR” the transaction in which HBC will
become a private company owned by certain continuing shareholders
(the “Continuing Shareholders”) and the Company’s other
shareholders (the “Minority Shareholders”) will receive $11.00 per
share in cash. The Special Meeting of Shareholders (the “Special
Meeting”) to approve the transaction will be held at The Arcadian
Loft, 8th Floor, 401 Bay Street, Toronto, Ontario, on February 27,
2020 at 10:00 a.m.
The Board of HBC (excluding conflicted directors) recommends
that all shareholders vote FOR the privatization transaction
at the Special Meeting.
David Leith, Chair of the Special Committee, said, “We are
pleased that all three proxy advisory firms have recommended in
favor of the privatization transaction. Their positive
recommendations are consistent with the Special Committee’s view
that this transaction is in the best interests of the Company, is
fair to the Minority Shareholders, and provides certain and
immediate value at a significant market premium.”
Proxy Advisory Firm Recommendations
In making its recommendation FOR, ISS concluded that:
- The $11.00 in cash per share offer by the Continuing
Shareholders “appears to represent the best available alternative
for minority shareholders, particularly in light of the risks
associated with executing the company's standalone plan in a
challenging retail environment.”
- “The quantum of the Consideration to be paid to the Minority
Shareholders is the product of extensive negotiations between the
Special Committee, the Continuing Shareholders and Catalyst and
their respective advisors that resulted in an increase in the
purchase price to be paid to the Minority Shareholders from $9.45
per common share under the Initial Proposal to $11.00 per common
share.”
In making its recommendation FOR, Glass Lewis concluded
that:
- “We believe that the higher price is particularly favorable to
[minority] shareholders when viewed in the context of the Company’s
deteriorating profitability in recent years and the substantial
industry headwinds that the Company continues to face.”
- “In sum, the revised deal offers unaffiliated minority
shareholders with a higher exit value for their HBC shares compared
to the original deal, while the voting support agreement with
Catalyst improves the likelihood of the deal proceeding.”
In recommending a vote FOR the transaction, Egan-Jones
noted that:
- “Based on the review of publicly available information on
strategic, corporate governance and financial aspects of the
proposed transaction, Egan-Jones views the proposed transaction to
be a desirable approach in maximizing shareholder value.”
- “After careful consideration, we believe that approval of the
merger agreement is in the best interests of the Company and its
shareholders and its advantages and opportunities outweigh the
risks associated to the transaction.”
Special Meeting of Shareholders on February 27, 2020
Shareholders as of the close of business on the record date of
January 27, 2020 are entitled to vote at the Special Meeting. In
order for shareholders’ votes to be counted at the Special Meeting,
shareholders as of the new record date of January 27, 2020 must
recast any votes they may have cast in connection with the special
meeting of shareholders that had been scheduled for December 17,
2019.
Each shareholder’s vote is important regardless of the number of
shares owned. The Special Committee and the Board (excluding
conflicted directors) recommend that Minority Shareholders vote in
favor of the transaction in advance of the proxy voting deadline of
10:00 a.m. ET on Tuesday, February 25, 2020. Shareholders with
questions about how to vote their shares may contact HBC’s proxy
solicitation agent, Kingsdale Advisors, by telephone at
1-866-581-0512 (toll-free) or 1-416-867-2272 (collect) or by email
at contactus@kingsdaleadvisors.com.
Materials related to the Special Meeting are available under
HBC’s profile on SEDAR at www.sedar.com and on HBC’s website at
www.investor.hbc.com. Shareholders can access voting instructions
and additional information about the transaction, including the
Management Information Circular, by visiting
www.HBCGoPrivate.com.
Additional Transaction Information
The transaction is structured as a purchase for cancellation of
common shares by HBC. As a result, a shareholder will be deemed to
receive a dividend to the extent that the repurchase price exceeds
the “paid-up capital” (“PUC”) of the shareholder’s common shares.
The amount of this deemed dividend may differ significantly from
the shareholder’s economic gain. HBC’s current estimate is that PUC
is approximately $7.26 per common share. A shareholder who holds
their shares as capital property for Canadian income tax purposes
may also realize a capital gain (or a capital loss) to the extent
that the purchase price received, net of any deemed dividend,
exceeds (or is exceeded by) the aggregate of the adjusted cost base
of the shareholder’s common shares and any reasonable costs of
disposition.
The Canadian federal income tax rate applicable to the receipt
of a deemed dividend by a shareholder resident in Canada may be
higher than the rate that would apply to a capital gain.
Shareholders who are not residents of Canada generally will not be
subject to Canadian federal income tax on capital gains realized on
disposition of their common shares, but will be subject to Canadian
withholding tax at a rate of 25% (subject to reduction under an
applicable treaty) on any deemed dividend arising from the purchase
for cancellation. As a result, shareholders may prefer to sell
their common shares in the public markets with a settlement date
that is prior to the completion of the transaction. It is strongly
suggested that shareholders consult their own tax advisors and read
carefully the tax disclosure section of the Management Information
Circular.
About HBC
HBC is a diversified retailer focused on driving the performance
of high-quality stores and their omni-channel platforms and
unlocking the value of real estate holdings. Founded in 1670, HBC
is the oldest company in North America. HBC’s portfolio today
includes formats ranging from luxury to premium department stores
to off price fashion shopping destinations, with nearly 250 stores
and approximately 30,000 employees around the world. HBC’s leading
businesses across North America include Saks Fifth Avenue, Hudson’s
Bay, and Saks OFF 5TH. HBC also has significant investments in real
estate joint ventures. It has partnered with Simon Property Group
Inc. in the HBS Joint Venture, which owns properties in the United
States. In Canada, it has partnered with RioCan Real Estate
Investment Trust in the RioCan-HBC Joint Venture.
Forward-Looking Statements
Certain statements made in this news release are forward-looking
statements within the meaning of applicable securities laws,
including, but not limited to, statements with respect to the
rationale of the Special Committee and the Board of Directors for
entering into the Arrangement Agreement, as amended, the terms and
conditions of the Arrangement Agreement, as amended, the timing of
various steps to be completed in connection with the transaction,
and other statements that are not material facts. Often but not
always, forward-looking statements can be identified by the use of
forward-looking terminology such as “may”, “will”, “expect”,
“believe”, “estimate”, “plan”, “could”, “should”, “would”,
“outlook”, “forecast”, “anticipate”, “foresee”, “continue” or the
negative of these terms or variations of them or similar
terminology.
Although HBC believes that the forward-looking statements in
this news release are based on information and assumptions that are
current, reasonable and complete, these statements are by their
nature subject to a number of factors that could cause actual
results to differ materially from management’s expectations and
plans as set forth in such forward-looking statements, including,
without limitation, the following factors, many of which are beyond
HBC’s control and the effects of which can be difficult to predict:
(a) the possibility that the transaction will not be completed on
the terms and conditions, or on the timing, currently contemplated,
and that it may not be completed at all, due to a failure to obtain
or satisfy, in a timely manner or otherwise, required shareholder
and regulatory approvals and other conditions of closing necessary
to complete the transaction or for other reasons; (b) risks related
to tax matters; (c) the possibility of adverse reactions or changes
in business relationships resulting from the announcement or
completion of the transaction; (d) risks relating to HBC’s ability
to retain and attract key personnel during the interim period; (e)
the possibility of litigation relating to the transaction; (f)
credit, market, currency, operational, real estate, liquidity and
funding risks generally and relating specifically to the
transaction, including changes in economic conditions, interest
rates or tax rates; (g) risks and uncertainties relating to
information management, technology, supply chain, product safety,
changes in law, competition, seasonality, commodity price and
business; and (h) other risks inherent to the Company’s business
and/or factors beyond its control which could have a material
adverse effect on the Company or the ability to consummate the
transaction.
HBC cautions that the foregoing list of important factors and
assumptions is not exhaustive and other factors could also
adversely affect its results. For more information on the risks,
uncertainties and assumptions that could cause HBC’s actual results
to differ from current expectations, please refer to the “Risk
Factors” sections of HBC’s Annual Information Form dated May 3,
2019 and Amended and Restated Management Information Circular dated
January 30, 2020 as well as HBC’s other public filings, available
at www.sedar.com and at www.hbc.com.
The forward-looking statements contained in this news release
describe HBC’s expectations at the date of this news release and,
accordingly, are subject to change after such date. Except as may
be required by applicable Canadian securities laws, HBC does not
undertake any obligation to update or revise any forward-looking
statements contained in this news release, whether as a result of
new information, future events or otherwise. Readers are cautioned
not to place undue reliance on these forward-looking
statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20200218005211/en/
Investor Relations: Jennifer Bewley, 646-802-4631
jennifer.bewley@hbc.com Media: Special Committee Sard
Verbinnen & Co Liz Zale/Paul Scarpetta, 212-687-8080 Meghan
Gavigan, 415-618-8750 Company Nicole Schoenberg,
332-323-9971 press@hbc.com