12/11/2019
Proxy Adviser Glass Lewis Urges HBC Shareholders to Back Richard Baker Bid
Globe and Mail (12/11/19) Younglai, Rachelle; Jones, Jeffrey
Hudson's Bay Co. (HBAYF) shareholders are being advised by proxy adviser Glass Lewis & Co. to accept Hudson's Bay Executive Chairman Richard Baker's $1.1 billion privatization bid instead of waiting for a higher offer from private equity fund Catalyst Capital Group Inc. Catalyst, which has a 17.5% stake in Hudson's Bay, has proposed paying $11 per share for the company, higher than Baker's bid of $10.30 per share, though Hudson's Bay's special board committee has rejected Catalyst's offer. Glass Lewis questioned whether Catalyst had "obtained sufficient funding commitments" and said the private-equity company had not shown that it would be able to secure support from Baker's group of shareholders, which control 57% of Hudson's Bay's stock. The value offered by Catalyst is "illusory," Glass Lewis said. A vote on the Baker offer is scheduled for Dec. 17, and for it to succeed, the majority of the remaining shareholders must back the bid. Catalyst says it has sufficient backing from other dissident minority shareholders to block the offer. Meanwhile, Institutional Shareholder Services (ISS) has urged shareholders to oppose Baker's offer, saying that Hudson's Bay's sale process had "significant defects." ISS said the committee in charge of evaluating the offer handcuffed itself by recommending an agreement that defines a superior proposal as something that could never happen—prompt the majority shareholders to sell. Glass Lewis recognized that there were concerns the Baker offer bid would clear the 75% super majority hurdle but said it saw "no viable path" for Catalyst to win support from Baker's group, which includes Rhone Capital LLC, Hanover Investments (Luxembourg) SA, and Abrams Capital Management LP. "We believe it would be nonsensical for the board to terminate" the Baker bid and "imprudent" for HBC shareholders to spurn it, "simply for the opportunity to consider an alternative proposal that would ultimately stand no chance of being approved," Glass Lewis said in its report. Catalyst says the Glass Lewis report failed to address its concerns about Baker's acquisition group, such as the announcement of the plan to buy out minority shareholders on the same day in June that the company disclosed it had agreed to sell the remainder of its European holdings to its partner for $1.5 billion. "Glass Lewis ignored all of the issues related to the creation of the Baker Group and buys into the threat that the take under proposed by that group is the only option," Catalyst partner Gabriel de Alba said in a statement. "It is somewhat shocking that they would turn a blind eye to all of the conflicts, manipulations, and intentionally misleading and incomplete disclosures, particularly in this day and age."
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