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Hudson’s Bay executive leads bid to take retailer private

June 10, 2019
FILE - In this Feb. 20, 2019, file photo a mannequin wears a red dress inside the Saks Fifth Avenue's flagship midtown Manhattan store in New York. A group of shareholders of Saks Fifth Avenue's parent is making an offer to take the struggling department store chain private. The offer was announced Monday, June 10. (AP Photo/Kathy Willens, File)

NEW YORK (AP) — A group of shareholders of Saks Fifth Avenue’s parent has made a cash offer to take the struggling department store chain private.

The offer, announced Monday, is being led by Hudson’s Bay Executive Chairman Richard Baker, Rhone Capital LLC, WeWork Property Advisors, Hanover Investment SA and Abrams Capital Management. The proposal values the company at 9.45 Canadian dollars ($7.12) per share. That’s a 48% premium to the company’s closing share price on the Toronto Stock Exchange on Friday.

The group of shareholders together own 57% of the Canadian company.

The offer is conditioned in part on the $1.5 billion sale announced Monday of Hudson’s remaining half of its interest in its European business.

“We believe that improving (Hudson’s Bay’s) performance will require significant time and patient long-term capital that is better suited in a private company context without the emphasis on short-term results and returns,” said Baker in a statement.

Like many department stores, Hudson’s Bay, which also operates Lord & Taylor and its namesake chain in addition to Saks Fifth Avenue, has struggled to adapt to a dramatic shift to online shopping.

Last month, Hudson’s Bay said it hired a financial adviser to review its Lord & Taylor’s business and that the process may lead to a sale or merger. Lord & Taylor traces its origins back more than 190 years, when it was founded as a dry goods store in 1826. The store has had several owners. It was acquired by Hudson’s Bay Co. in 2012. The move follows the closing of the Lord & Taylor flagship on Manhattan’s Fifth Avenue in early January after the building was sold to WeWork, an office space-sharing company.

Other companies have tried to go public to avoid being under the magnifying glass of the public markets.

The family that controls Nordstrom tried to take the department store chain private but gave up on that attempt in March 2018 because they couldn’t raise enough financing.

On Friday, Barnes & Noble announced it was being acquired by hedge fund Elliott Management for $476 million and will be taken private.

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