An activist investor in Hudson’s Bay Company (HBC) has criticised the chairman’s recent offer to take the retailer private as “woefully inadequate”.

In a statement last week, HBC said its board has formed a special committee to review a proposal from a group of HBC shareholders to privatise the company at a cash price of CAD9.45 per share.

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The group submitting the proposal includes individuals and entities related to, or affiliated with, Richard Baker, governor and executive chairman of HBC; Rhône Capital; WeWork Property Advisors; Hanover Investments (Luxembourg); and Abrams Capital Management. The group disclosed that they collectively own about 57% of the outstanding common shares of HBC on an as-converted basis.

At the time, the special committee noted “no decision has been made and it intends to carefully and thoroughly review the proposal with the assistance of its outside financial and legal advisors.” HBC added it does not intend to comment on or disclose further developments regarding the committee’s evaluation unless and until it deems further disclosure is appropriate or required.

However, the news has prompted a reaction from Land & Buildings Investment Management, LLC, an activist investor in HBC, which said the offer “materially undervalues the exceptional assets the company owns.”

In a letter addressed to the special committee yesterday (18 June), Jonathan Litt, founder and CIO of Land & Buildings Investment Management, said: “We trust that you, the sspecial committee, willfully and fairly evaluate the proposal, and thus will ultimately agree that it is woefully inadequate.”

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“As a result, we hope you will explore other potential transactions to maximise value for all shareholders by undertaking a robust strategic alternatives process, given the iconic nature of HBC’s real estate that would attract a deep potential buyer pool; and hiring a truly independent investment bank, without former business or personal relationships with any members of the management buyout group or HBC’s non-independent board members, to evaluate the value of the company’s real estate and retail banners.”

Litt also mentioned the buyout group’s planned purchase of 10% of HBC’s common shares from Ontario Teachers’ Pension Plan Board for the same CAD9.45 price, announced in January. 

He claimed that would take Baker’s group’s total ownership of the company to 65%, not the 58% disclosed in filings, and that the deal would “likely be highly scrutinised by the Ontario Securities Commission.”

According to a report in The Financial Post, the Ontario Teachers’ Pension Plan Board has now announced plans to terminate their previous deal.

HBC could not be reached at the time of going to press.