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Saturday » January 21 » 2006
HBC mum as deadline for bids passes
Rita Trichur
The Canadian Press

Saturday, January 21, 2006

TORONTO - Hudson's Bay Co. stock dipped yesterday as Canada's oldest company remained silent about whether a white knight has emerged to fend off a hostile takeover offer for the national retailer.

The Toronto-based company, according to media reports, had set 5 p.m. ET yesterday as deadline for competing bids. The company has said in the past there are other interested parties but hasn't commented on the process.

Its shares shed 31 cents yesterday, or about two per cent, to close at $15.39 on the Toronto Stock Exchange. The stock hit a 52-week high of $16.05 on Tuesday.

Established in 1670, Hudson's Bay has more than 500 retail outlets, led by The Bay and Zellers chains.

U.S. businessman Jerry Zucker, who already owned just under 20 per cent of HBC, put the company in play last fall when he made an unsolicited takeover offer that values the Toronto retailer at over $1 billion.

Speculation about a white-knight suitor took flight this week on word that various parties were thumbing through HBC's finances and mulling competing takeover bids.

Topping that list, industry sources said, is conglomerate Onex Corp., which is reportedly partnering with privately held First Pro Shopping Centres on a due diligence review.

Neither company has commented.

First Pro was instrumental in bringing big-box giant Wal-Mart to Canada in the 1990s, and sources say Canada's largest retail developer is now interested in acquiring HBC's real-estate portfolio to help Wal-Mart set up its highly-anticipated supercentres in this country.

Analysts estimate HBC's real-estate assets have a market value of between $700 million and $900 million.

There were suggestions, however, that "continued-operation clauses" built into the leases of most Bay and Zellers stores were posing a potential obstacle.

Other rumoured suitors include U.S. private equity firm Cerberus Capital Management and Canadian shopping-mall owner RioCan Real Estate Investment Trust, Zellers' biggest landlord.

"We're obviously watching this," said Robert Johnston, Zucker's spokesman and vice-president of strategy at South Carolina-based Maple Leaf Heritage.

Zucker's offer of $14.75 a share, plus debt, expires Jan. 31. The clock is ticking, but in the absence of a competing bid, Mr. Johnston expects HBC's stockholders to tender their shares to his boss's offer next week.