HBC goes Zucker Soon it will be one big retail company called StoreCo, and it will own all the stores, but under different brands. But seriously, if this guy succeeds, you can say hello to Target (buying Zellers), and I would think the Bay would probably end up as a lot of Sears. __________________________________ Takeover a new adventure for HBC Gary Norris Canadian Press Friday, October 28, 2005 TORONTO -- Centuries before there was a country called Canada, there was the Hudson's Bay Co. Incorporated in May 1670 as The Governor and Company of Adventurers of England Trading into Hudson's Bay, it concentrated on the fur trade during its first 200 years of existence. "In order for us to understand the development of the Prairies, to understand relations between natives and non-natives, the Hudson's Bay Co. played such a tremendous role that we have to acknowledge it," York University history professor Marcel Martel commented Friday after the company received a $1-billion takeover bid by U.S. businessman Jerry Zucker. "They were there because they wanted to take advantage of a lucrative business, the fur trade, and of course they relied heavily on natives, on voyageurs, French-Canadians." The company's history is an epic tale of a private-sector exploration and exploitation of a large part of the continent -- and then an ongoing failure to fully profit from its assets, said Joe Martin, director of Canadian business history at the University of Toronto. "There's this romanticism around the company, but the more you look at it, it's a story of lost opportunities." In 1869, its vast chartered territory -- the region of northwestern Quebec, northern Ontario and western and arctic territories whose rivers drain into Hudson Bay -- was transferred to the two-year-old government of Canada. In return, the company received 300,000 pounds in cash and about five per cent of the arable land in what now is Manitoba, Saskatchewan and Alberta. "It's the biggest real-estate transaction in the history of the world, and nobody's heard of it," commented Martin. After spending the 1880s selling Prairie farmland to settlers, the company turned to retail trade, building a chain of western Canadian department stores and later -- belatedly, in the 1960s -- entering the eastern retail market. "There's a lack of reality around this" which has continued to the present day, said Martin. "There are these cultures within organizations that last for an extraordinarily long time, and if the management doesn't take very real stock of it, they'll be captive to the culture." Other ventures over the years included running oil and gas companies, engaging in property development and dabbling in businesses ranging from liquor distilling to travel agencies, credit bureaus and auction houses. Meanwhile, the company continued to expand its retail operations organically and through acquisitions. The most notable of those were the 1960 purchase of Morgan's department stores, the 1978 takeover of the Zellers discount chain, the 1979 purchase of the Simpsons stores, the 1990 acquisition of the Towers group, the 1993 takeover of the Woodward's department stores in B.C. and Alberta, and the 1998 purchase of Kmart Canada. In 1979, the family of the late newspaper magnate Roy Thomson took over Hudson's Bay Co., beating out a proposal by George Weston Ltd. The economic downturn of the early 1980s prompted HBC to shed non-core holdings and concentrate on its stores. The Thomson family sold the last of its shares in 1997, and Hudson's Bay Co. returned to its historical status as a joint stock corporation with no controlling owner. While it may be a grand old company, with almost 70,000 employees at more than 500 stores, Hudson's Bay hasn't been a notably grand investment in recent years. In 1994, it reported net profit of $184.3 million on revenue of $5.8 billion. Its 2004 profit was $60 million on revenue of $7.1 billion. Its shares (TSX:HBC), worth $25 each a decade ago, topped out at $38 in September 1997, then fell to the $6 level three years ago. They were around $9 when Zucker began accumulating a holding in mid-2003, and at $10.65 just before he disclosed his interest in December 2003. On Thursday, the day before Zucker's $14.75-per-share offer, the stock was at $12.63. The company's three-century trove of meticulous record-keeping has become a major store of information for historians, York's Martel observed, describing Hudson's Bay as one of the few companies that have shaped Canadian history. "Not that I'm very nostalgic," he added. "Of course it's a business, but it's a business that has shaped and has influenced the lives of so many Canadians."