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Activist investor calls for Hudson's Bay Co.'s executive chairman to resign if bid fails

Activist investor Jonathan Litt is calling for the resignation of Governor and Executive Chairman of the Hudson's Bay Company (HBC), Richard Baker. (ROBIN VAN LONKHUIJSEN/AFP/Getty Images)

An activist investor is calling for the resignation of Hudson’s Bay Co.’s executive chairman Richard Baker, should his “woefully inadequate” bid to take the retailer private fail.

Land and Buildings Investment Management LLC’s founder Jonathan Litt released a letter Thursday that he sent to fellow shareholders a day earlier that said Baker – who is part of a majority group of shareholders trying to take the retailer private at $9.45 per share – has attempted to “disenfranchise” minority shareholders with his bid.

“This process and Baker’s approach has decisively demonstrated that he is unqualified and far too conflicted to continue as governor of the board of directors, and for that matter, to continue as director of HBC at all,” Litt wrote in the letter.

Litt said that, should Baker’s “woefully inadequate” offer to takeover HBC fail, he will call for a special shareholders meeting to remove Baker from the board and replace him with a “respected former executive with intimate knowledge of the company.”

“As a consequence of Baker’s recent actions, it is crucial that there is minority shareholder representation on the board,” Litt wrote, adding that a newly elected director would be encouraged to undertake a plan that would monetize the company’s real estate.

The statement is the latest in an escalating fight over the future of the retailer, which operates Hudson’s Bay, Saks Fifth Avenue, and other chains and has been struggling amid a shifting retail landscape.

HBC announced in June that it was reviewing an offer from the majority group of shareholders, which collectively own 57 per cent of outstanding shares in the company, to take the retailer private at $9.45 per share.

The offer has been slammed by some minority shareholders, including private equity investment firm Catalyst Capital Group Inc. and Land and Buildings. The criticism appears to be supported by HBC’s special committee reviewing the offer, which released a statement last week calling the offer inadequate. The company did not provide additional details, but said the statement was based on “initial analysis completed to date by its financial advisors and other factors.”

The Baker-led offer will require support from a majority of the minority shareholders in order to be approved.

Catalyst has also come forward with its own offer to purchase 8 per cent of the company’s outstanding shares for $10.11 per share. HBC has said if all common shares are taken up by Catalyst, the private equity firm will control “a meaningful portion of the common shares held by the minority shareholders.”

Litt also called on HBC to disclose all information Baker provided the other investors making up the majority shareholder group, as well as any other agreements made leading up to or during the offer.

“These requests are unfortunately reasonable given the precipitous and ill-advised journey Baker has taken shareholders of HBC on over the past several years, but particularly in this latest chapter over the past several months.”

Litt has been pushing for HBC to overhaul its operations and take advantage of its real estate portfolio since 2017, and has previously pointed to statements made by chief executive Helena Foulkes last year that pegged the company’s real estate value at $28 per share.

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