UPDATE 2-Hudson's Bay chairman, shareholders propose C$1.74 bln go-private deal

Hudson's Bay Co Executive Chairman Richard Baker on Monday teamed up with other shareholders and offered to take the struggling Canadian retailer private in a C$1.74 billion cash deal. Shares of Hudson's Bay rose 45% to C$9.25 on Monday, slightly below the C$9.45 that shareholders will receive under the proposed deal.

The shareholders group said it owns about 57% of the company. Hudson's Bay, which owns Saks Fifth Avenue and Lord & Taylor, said it has formed a special committee of independent directors to review the proposal.

The company's shares have fallen 41% over the last 12 months, prompting shareholder activism, as it struggles to compete with e-commerce behemoths such as Amazon.com Inc . Land & Buildings had called on Hudson's Bay last year to sell the Saks Fifth Avenue and Lord & Taylor brands and its 50% interest in the European joint venture, saying the company must do more to unlock shareholder value.

A source familiar with the thinking of Land & Buildings, a shareholder of Hudson's Bay, told Reuters that the hedge fund considers Baker's offer significantly inadequate. "While we continue to believe in HBC's long-term potential, it has become clear that the significant challenges, risks and uncertainties facing HBC in the rapidly evolving retail environment are best addressed in a private market setting," Baker said in a statement.

Baker is widely credited with expanding Hudson's Bay, North America's oldest company, with acquisitions. He was also responsible for relisting the company in 2012. At its peak, the retailer was valued at more than C$5 billion. The company, which traces its roots back to fur trading in 1670, has been shutting its underperforming stores to cut costs, while annual same-store sales have fallen for the last three years.

Hudson's Bay also said on Monday it would sell its stake in its real estate joint venture in Germany to Signa Retail Holdings in a deal valued at C$1.5 billion. The proceeds from its Signa deal will be used to alleviate Hudson's Bay's debt, making a take-private deal more easy to finance. The take-private deal is subject to the completion of the divestiture.

Hudson's Bay had said in May that it was pursuing strategic alternatives such as a sale or merger for its department store Lord & Taylor. 

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