M
MetroMan1000
Guest
The Toronto Star:
Bay agrees to U.S. takeover
Jan. 26, 2006. 07:20 PM
CANADIAN PRESS
Hudson’s Bay Co.,(TSX: HBC), Canada’s oldest company, is ready to fall into American hands after more than 335 years in business.
A revised offer from U.S. businessman Jerry Zucker, valuing the storied retailer at about $1.5 billion including debt, was ``unanimously endorsed†by HBC’s board of directors Thursday, days before his previous bid was set to expire.
The deal with the company’s largest shareholder, after five days of intense negotiations, came in the face of what HBC said were ``multiple offers†from outsiders. It gave no details of those offers.
“On behalf of the management of HBC, we are pleased with the outcome of the auction process and fully support Mr. Zucker’s enhanced offer,†said Hudson’s Bay Co. president and CEO George Heller.
“We are anxious to get to work with Mr. Zucker on realizing the value that we know is inherent in this great company.â€
Nearly three months after putting the historic retailer in play, Zucker’s Maple Leaf Heritage Investments Acquisition Corp. boosted its all-cash offer of $14.75 per share to $15.25 a share, or $1.06 billion plus assumed debt.
Hudson’s Bay stock (TSX:HBC) reacted by jumping $1.10 to $15.03 on the Toronto Stock Exchange as more than 13.4 million shares changed hands.
The deal, however, failed to impress Dominion Bond Rating Service, which kept HBC “under review with negative implications,†reiterating concern that Zucker might gut the retailer of its real-estate assets which have an estimated value of between $700 million and $900 million.
The new bid — now to be considered by holders of the 81 per cent of the company not already owned by Zucker — “constitutes full and fair value for the company,†said HBC management, which had previously rejected as inadequate Zucker’s offer of $14.75 per share, set to expire Jan. 31.
Established in 1670, Hudson’s Bay has more than 500 outlets, led by the Bay and Zellers chains. Its early wilderness exploration, fur trade and colonization provided the foundation for European settlement of much of the country.
Nevertheless, industry watchers say Canadians’ sentiment for the historic retailer has waned, and the company has struggled with poor financial results as bargain-hungry shoppers flock to other retailers, many of them U.S.-based, above all Wal-Mart.
Robert Johnston, Zucker’s spokesman and vice-president of strategy at South Carolina-headquartered Maple Leaf Heritage, said worries about American ownership are “poorly placed.â€
“This company has been a Canadian icon into its fourth century now. Having a foreign owner of this company will no way change or diminish that,†said Johnston, himself a Canadian.
“You have to recognize that this company was owned by foreigners up until three decades ago. It was, in fact, headquartered in the United Kingdom.â€
Wendy Evans, president of Evans & Co. retail consultants, said Canadians consider HBC a purveyor of culture.
“We have a pretty distinct culture that is different from that of the U.S.,†Evans said. “I think a blend of the two is very positive but I don’t think we want to have a total Americanization of Canadian retail.â€
She suggested that HBC’s takeover is part of a larger trend of industry consolidation, predicting that by 2015 nearly 70 per cent of the Canadian retail sector will be foreign-owned.
Retailing has been in flux for years, leading to the demise of other erstwhile favourites like Eaton’s, Simpson’s, Woolco, Towers and Dylex.
Sears Canada (TSX:SCC) is poised to be swept up by its American parent company, Sears Holdings Corp., which has offered $835.4 million for the 46.2 per cent of Sears Canada it doesn’t already own.
While industry watchers remain suspicious of Zucker’s plans, Johnston was adamant that his boss wants to revitalize HBC.
No widespread layoffs or store closures are planned, Johnston said.
“We will take this one day at a time with a meaningful focus on rebuilding the brand, the image and the performance of each and every individual store,†Johnston said.
“The issue of Wal-Mart is difficult for retailers globally, but clearly by not being a public company in the future, HBC won’t need to make decisions which are based on making the quarter. Now we’ll be able to focus on the medium and the long term.â€
Evans said Canadian consumers may not see immediate changes, but ``several of the divisions may be sold in the longer term or spun off. Zellers may also be downsized.â€
Zucker’s new offer carries fewer conditions. His previous bid required acceptance by owners of about 90 per cent of HBC shares; that threshold has been lowered to two-thirds.
“As the company’s largest shareholder for more than two years, we are aware of the tremendous opportunities available to HBC,†Zucker said in a statement.
“We are committed to enhancing our customers’ shopping experience through a substantially greater focus on service and revitalizing the spirit of the organization.â€
HBC spokesman Rob Moore said the company was “negotiating with more than one party right up and until the end.â€
He declined to specify, but there was speculation that Toronto conglomerate Onex Corp. (TSX:OCX.SV) and mall developer First Pro Shopping Centres had launched an offer, aiming to help U.S. discount giant Wal-Mart expand in Canada.
Rumoured suitors also included U.S. private equity firm Cerberus Capital and Canadian shopping-mall owner RioCan Real Estate Investment Trust (TSX:REI.UN), Zellers’ biggest landlord.
Maple Leaf will mail its new offer by Feb. 10, and HBC will recommend that shareholders accept it before it expires Feb. 24.
Bay agrees to U.S. takeover
Jan. 26, 2006. 07:20 PM
CANADIAN PRESS
Hudson’s Bay Co.,(TSX: HBC), Canada’s oldest company, is ready to fall into American hands after more than 335 years in business.
A revised offer from U.S. businessman Jerry Zucker, valuing the storied retailer at about $1.5 billion including debt, was ``unanimously endorsed†by HBC’s board of directors Thursday, days before his previous bid was set to expire.
The deal with the company’s largest shareholder, after five days of intense negotiations, came in the face of what HBC said were ``multiple offers†from outsiders. It gave no details of those offers.
“On behalf of the management of HBC, we are pleased with the outcome of the auction process and fully support Mr. Zucker’s enhanced offer,†said Hudson’s Bay Co. president and CEO George Heller.
“We are anxious to get to work with Mr. Zucker on realizing the value that we know is inherent in this great company.â€
Nearly three months after putting the historic retailer in play, Zucker’s Maple Leaf Heritage Investments Acquisition Corp. boosted its all-cash offer of $14.75 per share to $15.25 a share, or $1.06 billion plus assumed debt.
Hudson’s Bay stock (TSX:HBC) reacted by jumping $1.10 to $15.03 on the Toronto Stock Exchange as more than 13.4 million shares changed hands.
The deal, however, failed to impress Dominion Bond Rating Service, which kept HBC “under review with negative implications,†reiterating concern that Zucker might gut the retailer of its real-estate assets which have an estimated value of between $700 million and $900 million.
The new bid — now to be considered by holders of the 81 per cent of the company not already owned by Zucker — “constitutes full and fair value for the company,†said HBC management, which had previously rejected as inadequate Zucker’s offer of $14.75 per share, set to expire Jan. 31.
Established in 1670, Hudson’s Bay has more than 500 outlets, led by the Bay and Zellers chains. Its early wilderness exploration, fur trade and colonization provided the foundation for European settlement of much of the country.
Nevertheless, industry watchers say Canadians’ sentiment for the historic retailer has waned, and the company has struggled with poor financial results as bargain-hungry shoppers flock to other retailers, many of them U.S.-based, above all Wal-Mart.
Robert Johnston, Zucker’s spokesman and vice-president of strategy at South Carolina-headquartered Maple Leaf Heritage, said worries about American ownership are “poorly placed.â€
“This company has been a Canadian icon into its fourth century now. Having a foreign owner of this company will no way change or diminish that,†said Johnston, himself a Canadian.
“You have to recognize that this company was owned by foreigners up until three decades ago. It was, in fact, headquartered in the United Kingdom.â€
Wendy Evans, president of Evans & Co. retail consultants, said Canadians consider HBC a purveyor of culture.
“We have a pretty distinct culture that is different from that of the U.S.,†Evans said. “I think a blend of the two is very positive but I don’t think we want to have a total Americanization of Canadian retail.â€
She suggested that HBC’s takeover is part of a larger trend of industry consolidation, predicting that by 2015 nearly 70 per cent of the Canadian retail sector will be foreign-owned.
Retailing has been in flux for years, leading to the demise of other erstwhile favourites like Eaton’s, Simpson’s, Woolco, Towers and Dylex.
Sears Canada (TSX:SCC) is poised to be swept up by its American parent company, Sears Holdings Corp., which has offered $835.4 million for the 46.2 per cent of Sears Canada it doesn’t already own.
While industry watchers remain suspicious of Zucker’s plans, Johnston was adamant that his boss wants to revitalize HBC.
No widespread layoffs or store closures are planned, Johnston said.
“We will take this one day at a time with a meaningful focus on rebuilding the brand, the image and the performance of each and every individual store,†Johnston said.
“The issue of Wal-Mart is difficult for retailers globally, but clearly by not being a public company in the future, HBC won’t need to make decisions which are based on making the quarter. Now we’ll be able to focus on the medium and the long term.â€
Evans said Canadian consumers may not see immediate changes, but ``several of the divisions may be sold in the longer term or spun off. Zellers may also be downsized.â€
Zucker’s new offer carries fewer conditions. His previous bid required acceptance by owners of about 90 per cent of HBC shares; that threshold has been lowered to two-thirds.
“As the company’s largest shareholder for more than two years, we are aware of the tremendous opportunities available to HBC,†Zucker said in a statement.
“We are committed to enhancing our customers’ shopping experience through a substantially greater focus on service and revitalizing the spirit of the organization.â€
HBC spokesman Rob Moore said the company was “negotiating with more than one party right up and until the end.â€
He declined to specify, but there was speculation that Toronto conglomerate Onex Corp. (TSX:OCX.SV) and mall developer First Pro Shopping Centres had launched an offer, aiming to help U.S. discount giant Wal-Mart expand in Canada.
Rumoured suitors also included U.S. private equity firm Cerberus Capital and Canadian shopping-mall owner RioCan Real Estate Investment Trust (TSX:REI.UN), Zellers’ biggest landlord.
Maple Leaf will mail its new offer by Feb. 10, and HBC will recommend that shareholders accept it before it expires Feb. 24.
