Hudson's Bay pulls out of Germany in €1b deal with JV partner Signa

Canada's Hudson's Bay Company is selling its German retail assets to its joint venture partner, Signa Holding, to release capital and pay off debts of €290 mln.

HBC announced it was divesting its minority stake in the retail JV, as well as releasing Signa from its '50.01% back-to-back guarantee of certain obligations of Hudson's Bay Netherlands' for a total consideration of CA$1.5 bn (€1 bn). The deal will see HBC completely exit its German operations, just nine months after the partnership with Signa was concluded.

The Wall Street Journal reported on Monday that a group of shareholders including chairman Richard Baker, Rhône Capital LLC and WeWork Property Advisors, who control 57% of outstanding shares, had made an offer to take the company private, valuing the company at CA$9.45 (€6.30) a share.

HBC turned down a €3 bn offer from Signa last year for its Galeria Kaufhof business. The JV merged Galeria Kaufhof with Signa's Karstadt business to create a new platform with 243 city-centre locations and a total of 32,000 employees.

HBC will retain its ownership of 15 Dutch stores, although some closures are expected. The company announced in April that its offshoot Saks Off 5th would be closing its stores in Amsterdam and Rotterdam at the end of June. Dutch media reported that last year that HBC made losses of €80 mln in the Netherlands during 2018.

The company said a portion of the net proceeds from the sellout to Signa would go towards strengthening the balance sheet, including repayment of its outstanding CA$436 mln (€290 mln) term loan.

Helena Foulkes, CEO of HBC, said: 'This agreement is an exciting milestone for HBC as it will deliver important financial and strategic benefits.

'Financially, it provides us with the best opportunity to capitalise on our German real estate and allows us to further strengthen our balance sheet. Strategically, we will be able to fully focus our resources on HBC’s North American operations, including our best growth opportunities - Saks Fifth Avenue and Hudson’s Bay.'

JP Morgan Securities LLC acted as exclusive financial advisor to HBC on the transaction.


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