Ontario Teachers’ terminates agreement to sell 10% stake in HBC

The Ontario Teachers’ Pension Plan has terminated an agreement to sell its 10 per cent stake in the Hudson’s Bay Co. to a private entity.

The announcement comes after HBC’s publicly traded shares rose above what the Ontario Teachers’ would have received under the Jan. 3 agreement to sell them. It had agreed to sell nearly 18 million shares for $9.45 each to an entity controlled by the retailer’s executive chairman Richard Baker.

Read: Ontario Teachers’ sells stake in renewables firm, PSP joins Nestle subsidiary acquisition

That price was a benchmark for a June 10 going-private offer of $9.45 per share from Baker and other company shareholders as HBC announced the pending sale of its German assets for $1.5 billion. The stock closed Monday at $10.25, up from the pre-offer price of $6.37 on June 7, an all-time low closing price.

As of Tuesday afternoon, HBC shares were down 21 cents at $10.04.

The Ontario Teachers’ declined to comment Tuesday, but it now appears to be part of the minority shareholder group that will decide whether to accept the Baker-led buyout offer to take HBC private.

Read: Ontario Teachers’ launches venture capital investment platform

Earlier Tuesday, Land and Buildings Investment Management, a long-time critic of HBC’s performance under Baker’s leadership, called the privatization offer woefully inadequate. “We believe it is highly unlikely that a majority of the minority shareholders will approve the transaction, given the substantial undervaluation the offer represents . . . ,” wrote Jonathan Litt, founder of Land and Buildings, in an open letter.

Litt called for a committee of independent HBC directors, who will evaluate the going-private offer and make a recommendation to minority shareholders, to explore other potential transactions. The Land and Buildings letter suggested minority shareholders could be paid $18 per share if all of the $1.5 billion from the German asset sale is used to buy out minority shareholders.