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Hudson Bay sells to Zucker

The board of Hudson's Bay Co., Canada's oldest company, unanimously agreed Thursday to a sweetened $15.25-a-share offer from U.S. billionaire Jerry Zucker's investment firm. Mr. Zucker's Maple Leaf Heritage Investments Acquisition Corp. will pay about $860.4-million plus debt for the shares it doesn't already own, up from its previous offer of $832.2-million. That's 50 cents per share more than its last offer. The move comes after several other parties expressed interest in buying the 336-year-old retailer, among them U.S. equity firm Cerberus Capital Management LP and buyout powerhouse Onex Corp. with mall developer Mitchell Goldhar, the Globe and Mail reported. Today's offer, however, likely seals the deal, analysts said. “I can't imagine that there's going to be a white knight that comes out of the woodwork,” Lori Wachs, president and portfolio manager at Delaware Investments, told Report on Business Television. “I would imagine that everyone's looking to close it sooner rather than later.” Advertisements Hudson's Bay, established in 1670, is Canada's largest department store retailer. It has 550 stores as part of the Bay, Zellers and Home Outfitters chains. The company employs almost 70,000 people across Canada. “The board has conducted a thorough process to maximize value for the shareholders of HBC, and after considering several offers for the company, has unanimously endorsed and is recommending that shareholders tender to the amended offer,” Yves Fortier, Hudson's Bay's governor, said in a statement. “We are satisfied that the amended offer constitutes full and fair value for the company.” Hudson's Bay shares jumped $1.10 or 7.9 per cent to $15.03 in Toronto with 10.7 million shares changing hands. The conditions on the offer, which expires Feb. 24, have been significantly reduced. The amended offer is conditional on a minimum of 662/3 per cent of the shares of HBC being tendered (from a 90-per-cent threshold in its last offer), tender of a majority of HBC's unsecured subordinated debentures under the offer and the receipt of all necessary regulatory approvals. “On behalf of the management of HBC, we are pleased with the outcome of the auction process and fully support Mr. Zucker's enhanced offer,” said George Heller, HBC's president and chief executive. Mr. Zucker has also offered to buy all of the outstanding 7.5 per cent convertible unsecured subordinated debentures due in 2008 at $1,010 for each $1,000 principal amount of debentures, the company said. “We are pleased to have reached this agreement with HBC today and to be associated with a company with such a long and proud history,” Mr. Zucker said in a statement. “Through the implementation of more efficient methods we will positively differentiate HBC from its competitors.” Maple Leaf will mail the amended offer by Feb. 10. Maple Leaf's Robert Johnston told ROB-TV his firm boosted the price after a closer look at HBC's books and with the intention of changing the offer to friendly from hostile. There is a break fee, he said, though he didn't specify how much. He said Maple Leaf doesn't plan to sell large chunks of the Canadian retailer. “In a large part, we have no plans to sell any major assets to any other retailers,” he said. Apart from his pursuit of Hudson's Bay, Mr. Zucker isn't widely known in Canada. Few of the secretive billionaire's investments are household names or marquee properties. His Charleston, S.C.-based holding company InterTech Group Inc. owns mainly obscure chemical and engineered product makers. Mr. Zucker also owns electronics companies, hockey rinks, laser tag centres, banking machine suppliers, two Charleston restaurants and commercial real estate. At various times, he's also owned banks and textile makers, including Montreal-based Dominion Textile Inc. His ragtag collection of businesses generated an impressive $3-billion (U.S.) in revenue last year, making InterTech one of the largest private companies in the United States, according to Forbes Magazine. The magazine also ranked Mr. Zucker as the 346th wealthiest American in 2004, with an estimated fortune of more than $1-billion. He grew up in Florida and South Carolina, where his parents settled, and went to the University of Florida, where he earned undergraduate degrees in math and science, plus a masters in electrical engineering. Mr. Zucker's first notable business deal was in 1982, when he was still in his early thirties. He and a colleague bought a division of the textile manufacturer where they worked, RM Engineered Products. He used the investment as a springboard for a series of increasingly larger manufacturing acquisitions in the 1980s, including several divisions of then-shrinking chemicals giant E.I. du Pont de Nemours & Co. Maple Leaf owned about 18.8 per cent of HBC in October when he began bidding for the company. Source: By TAVIA GRANT Thursday, January 26, 2006 Posted at 2:40 PM EST Globe and Mail Update