Dive Brief:

• Canadian private equity firm Catalyst Capital Group on Wednesday plunked down 11 Canadian dollars per common share ($8.29 as of press time) for all of Hudson's Bay Co.'s common shares. The all-cash proposition comes a day after a shareholder group led by HBC Governor Richard Baker touted its own 10.30 Canadian dollars per share cash bid ($7.86 at the time the offer was made) as its "best and final offer."

• Catalyst also revealed that it filed a complaint with the Ontario Securities Commission over the "conduct by the Baker Group," which they characterized as "contrary to the public interest," including "misrepresentations in circular and other potential securities law violations and a deeply flawed process" in accepting the Baker offer. 

• HBC didn't immediately return Retail Dive's request for comment​.​ But representatives of the continuing shareholders​ group, led by Baker, cast doubt on the PE bid in an emailed​ statement​, saying they "believe Catalyst's 'offer' is in fact a highly conditional, non-binding and non-executable proposal that is not supported by fully committed financing, and is intended to mislead HBC shareholders." The group expressed confidence that its own offer would be accepted as providing "immediate and certain value in a highly uncertain retail environment."

Dive Insight:

HBC's investors now have before them a bid that, at least on its face, removes the adjectives from the Baker group's "best and final offer."

In a press release attaching its letter to the HBC special committee that reviewed the Baker offer, Catalyst characterized its own proposal as "a superior, independently financed, all-cash transaction that can be completed in a timely manner," (that is, February 2020), and even said it is "prepared to consider making a higher offer based on the results of its due diligence and the cooperation of the Special Committee."

The firm had harsh words for the only other bid on the table, calling it "flawed and coercive," and for Baker himself.

"It has been a revelation to us how far Richard Baker will go to acquire this iconic company for as cheaply as possible, without putting up a penny of his own money," Gabriel de Alba, Catalyst​ managing director and partner, wrote in part of a lengthy statement. "Shareholders deserve and demand better."

Catalyst has a litany of complaints about the process that led to the special committee's recommendation of the Baker bid. That includes that the bid was to be financed in part by HBC's divestment of its German real estate holdings. In June, HBC agreed to sell its remaining 50% interest in its German real estate joint venture and 49.99% interest in its European retail joint venture to partner SIGNA for $1.5 billion, marking HBC's exit from Germany. A portion of that transaction's net proceeds was slated to fully repay its outstanding $436 million term loan, but the rest, along with debt financing and the shareholder group's equity interest, would also fund the take-private transaction, the group said at the time.

The firm is also taking issue with the recent evaluation of other of HBC's extensive real estate holdings, which the board committee says has declined in value, citing a recently commissioned study. "Last year insiders disclosed a value of $28 per share for the real estate and now they want us to believe that over $2.5 billion of value has conveniently and suddenly disappeared," de Alba said.