The Canadian retailer released a statement Friday saying that the special committee of independent directors, which was set up to evaluate the shareholder offer and other strategic alternatives, had found the $9.45 per share bid to be inadequate. The company did not provide additional details, but said the statement was based on “initial analysis completed to date by its financial advisors and other factors.”
HBC announced in June that it was reviewing an offer from a group of shareholders, which collectively own 57 per cent of outstanding shares in the company, to take the retailer private at $9.45 per share.
The proposal has been criticized by some HBC shareholders, including private equity investment firm Catalyst Capital Group Inc. and activist investor Land and Buildings Investment Management LLC.
Catalyst released a statement Friday saying the Baker-led proposal “severely undervalues the company.” Last month, Catalyst came forward with its own offer to purchase eight per cent of the company’s outstanding shares – roughly 15 million shares – for $10.11 per share. Catalyst’s offer expires on August 16.
“It is also widely recognized that the Baker Group only intends to use shareholder capital and assets to buy out the company’s minority owners below fair value,” Catalyst said in a statement.
Catalyst also called the shareholder group’s concern about the company’s stock price declining should the offer fail “fear mongering” and said it does not take into account potential upside from HBC’s various strategic initiatives.
The special committee said in a statement it is not in a position to make a recommendation on the Catalyst offer.
“In view of the foregoing, however, the special committee advises shareholders to exercise caution regarding a decision to tender to the Catalyst offer,” HBC said in a statement.
Activist investor Land & Buildings Investment Management LLC had released an open letter calling the bid “woefully inadequate” and urged the special committee to explore other potential transactions that could “maximize value for all shareholders.”
“We want to be clear: this offer materially undervalues the exceptional assets the company owns,” the letter, signed by Land & Buildings founder Jonathan Litt, said.
“We trust that you, the Special Committee, will fully and fairly evaluate the proposal and thus will ultimately agree that it is woefully inadequate.”