Hudson's Bay Company (HBC) has formally rejected an offer to sell Germany's largest department store business and related real estate to its main rival in the country for €3 bn.
HBC, the Toronto-listed North American and European retail group, said in a statement that it had 'unanimously rejected' an unsolicited proposal to sell its Kaufhof department store operation and real estate.
The offer was tabled last year by Signa Holdings, an investment vehicle controlled by Austrian businessman René Benko. The approach has now been withdrawn 'thus concluding discussions', HBC said.
Signa Retail is already a significant player in the German market via its holdings in the Karstadt department stores; Karstadt Sports and The KaDeWe Group.
HBC said it had careful reviewed the offer in consultation with its financial and legal advisors which included an in-person meeting with Signa. 'The board has unanimously concluded that Signa's proposal is not in the best interest of HBC's shareholders. It significantly undervalues our German business and related real estate assets and is not supported by sufficient certainty of financing to warrant further consideration at this time,' said David Leith, lead independent director of the board.
HBC operates the store brands Hudson's Bay, Lord & Taylor, Saks Fifth Avenue, Gilt and Saks OFF 5TH in North America; Galeria Kaufhof, the largest department store group in Germany, and Belgium's only department store group, Galeria INNO. HBC is also active in the Netherlands, though it leases retail spaces rather than owning its own premises in this market.
'Our European business and related real estate assets represent critical components of our long-term strategy and we continue to have a high degree of confidence in our ability to drive results across our iconic retail banners,' added said Richard Baker, HBC's governor, executive chairman and interim CEO.
'Our diverse European real estate holdings add significant value to our global real estate assets and we remain committed to creating opportunities to improve the productivity of our portfolio. The company appreciates the interest in its European business and real estate assets, which validates the Company's view of the considerable underlying value these assets provide to HBC's shareholders. As always, we remain committed to any and all opportunities to enhance shareholder value.'
Last year activist shareholder Jonathan Litt of Land & Buildings urged HBC to seriously consider the offer, after placing pressure on the company to liquidate its real estate assets.
