U.S. investor Zucker to take HBC private
By Michael J. Knell -- Furniture Today, March 19, 2006
Toronto — U.S. investor Jerry Zucker has gained control of Canadian retailing icon Hudson's Bay Co. and plans to take the company private.
Zucker's Maple Leaf Heritage Investments Acquisition Corp. has acquired about 92% of HBC's outstanding shares.
"Since more than 90% of the common shares have been deposited to Heritage's share offer, Heritage intends to exercise its right to acquire the remaining outstanding common shares of HBC pursuant to a compulsory acquisition under the Canada Business Corporations Act," the company said in a press release.
Zucker's C$15.25 a share bid will value Canada's largest department store retailer — and one of the world's oldest continuously operating companies — at about C$1.5 billion, including debt.
In what was probably its final earnings report as a public company, HBC said just prior to the takeover announcement that for the fiscal year ended Jan. 31, the company lost C$175 million, or C$2.52 per share, a reversal from net earnings of C$60 million, or 86 cents per share, in the previous year.
Sales declined 1.7% to C$6.95 billion, with same-store sales down 1.6%.
Even the company's credit card division, which has agreed to sell off to General Electric for net proceeds of C$370 million, was smaller. Card receivables dropped to C$331 million in 2005 from C$427 million the previous year and C$539 in 2003.
In the fiscal fourth quarter, HBC lost C$76 million or C$1.08 per share compared with a profit of C$106 million or C$1.35 a year earlier. Sales dipped less than 1%, to C$2.24 billion.
The company attributed its earnings decline to a variety of factors, including paying C$12 million to fight Zucker's bid, heavy markdowns to clear out struggling product, a C$138 million write-down of goodwill in relation to its Zeller's division, and the cost of getting out of its merchandising deal with Martha Stewart.
Competition also stiffened from new and expanding players, HBC said. It also cited problems with the implementation of a computer-based logistics system.
South Carolina-based Zucker has named himself governor — the HBC equivalent of board chairman — and CEO of the company, and made several changes to the board of directors and senior management.
Long-time President and CEO George Heller stepped down, and was named to the board. Taking over as president is Michael Rousseau, formerly chief financial officer. He will also sit on the board as will James Ingram, the company's general counsel.
Gone from HBC are Marc Chouinard, chief operating officer; Thomas Haig and Peter Kenyon, executive vice presidents; and Rob Moore, vice president of corporate affairs.
The 500-store retailer has three major banners: The Bay, Zellers and Home Outfitters, plus smaller operations, including Designer Depot.
Discounter Zellers has lost considerable ground in recent years to Wal-Mart. The Bay is one of Canada's two remaining true department stores; the other is Sears Canada. Both Zellers and The Bay carry furniture and bedding.
In a letter to employees, Zucker said he wants to differentiate Zellers from The Bay, reversing the former management's strategy of centralizing management and merchandising functions.
He also has made improving customer service a priority, and wants to ensure that there's always inventory of advertised goods on hand. He also wants staff to wear nametags that display the languages they speak, in recognition of Canada's multicultural population.
He wants to rename the larger, more modern Zellers outlets — Zellers Superstore has been bandied about — and also wants to rename the larger Bay stores to differentiate themselves from suburban ones.
HBC isn't the only Canadian retailer facing upheaval. Sears Holding, parent to Sears Roebuck & Co. and Kmart in the United States and majority shareholder in Sears Canada, is pressing to acquire all those shares of the Canadian operation that it doesn't already own. However, Sears Canada's has recommended that shareholders not tender to the bid, saying the shares are undervalued.
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U.S. investor takes over Hudson’s Bay Co.
Mar 14, 2006 -
U.S. investor Zucker to take HBC private
Mar 22, 2006
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