Canadian private equity firm Catalyst Capital Group on Aug. 5 raised the number of Hudson's Bay Co. shares it intends to buy, now offering to take approximately 10.75% of the department store chain for about C$200 million.
Catalyst initially offered to buy up to 14,836,795 Hudson's Bay common shares, representing about 8.06% of the company's common stock, for C$10.11 each for a total deal value of about C$150 million. It is now offering to buy 19,782,393 common shares for the same offer price per share.
The private equity firm is building a bigger stake in the Canadian department store operator to oppose a proposal by a group of Hudson's Bay shareholders to take the company private for C$9.45 per share. The investor group includes Governor and Executive Chairman Richard Baker.
"Catalyst believes that the insider buyout proposal greatly undervalues the company across each of its real estate, retail and iconic brand attributes," the firm said in a statement. "Further, the Baker group is seeking to only use shareholder capital and assets to buy out the company's minority owners at a price that is not at all reflective of fair value."
Catalyst did not amend its per-share offer price, which represents a 7% premium to the shareholder group's buyout bid and an about 59% premium to the company's closing price on June 7, the day before the investor group sent its proposal.
The increased share acquisition offer came a few days after the special committee formed by Hudson's Bay to review the investor group takeover bid commented on Catalyst's initial offer, saying it is not in a position to make a recommendation regarding the proposal but advised shareholders to exercise caution in deciding whether to tender to the offer.
Hudson's Bay has tapped J.P. Morgan Securities as its financial adviser, Centerview Partners LLC as special adviser, and Blake Cassels & Graydon LLP as legal counsel to assist the company's special committee in evaluating the Baker group's offer, along with other strategic alternatives.
TD Securities Inc. was also hired to prepare an independent, formal valuation of the group's common shares, while other real estate appraisal firms and planning consultants were tapped to help value Hudson's Bay's real estate assets.
Catalyst will accept all tendered shares held by Hudson's Bay shareholders until 5 p.m. Toronto time on Aug. 16, unless extended.