Catalyst Capital to buy about 10% stake in Hudson's Bay

Buyout firm Catalyst Capital Group Inc said on Monday it will acquire a significant stake in Hudson’s Bay Co, a move that could block the department store’s executive chairman’s plans to take it private for C$1.74 billion.

Catalyst’s acquisition, which it plans to finalize in three days, represents the most significant move yet that could prevent Hudson’s Bay executive chairman Richard Baker from taking the company private with a consortium of shareholders holding 57 percent of the company. Baker needs a majority of minority shareholders to approve any deal he offers for the owner of department stores Saks Fifth Avenue, Lord & Taylor and Hudson’s Bay.

Hudson’s Bay did not immediately respond to a request for comment. A special committee for the department store has said Baker’s initial offer to acquire Hudson’s Bay at C$9.45 was “inadequate.”

Catalyst acquired 10.05 percent of Hudson’s Bay’s stock, or 18.5 million shares, at C$10.11 per share, for a total cost of $187 million. Last month, Catalyst offered $10.11 for 14.8 million shares of Hudson’s Bay, a proposal they increased to 19.8 million shares this month.

The stake adds to Catalyst’s existing holdings in Hudson’s Bay. The buyout firm’s total holdings could not be learned.

Hedge fund Land & Buildings Investment Management LLC has also said it does not support Baker’s deal, claiming it undervalues the retailer’s real estate. It is unclear how much Land & Buildings currently owns of Hudson’s Bay. In 2017, the hedge fund owned nearly 5 percent, Reuters reported.

A formal valuation of Hudson’s Bay under the supervision of the board’s special committee will be completed in September, Hudson’s Bay said this month.