Hudson's Bay rallies as activist asks it to explore options

Shares of retailer Hudson's Bay Co climbed as much as 17 percent on Monday after U.S. activist investor Land & Buildings Investment Management LLC called for the Saks Fifth Avenue owner to explore strategic options, including going private.

Saks Fifth Avenue

Hudson's Bay, which for five consecutive quarters has reported declines in sales at established stores, said it was reviewing a letter from Land & Buildings, which owns a 4.3 percent stake in the company.

The Canadian retailer's shares hit a record low on Friday, having lost a third of their value so far this year, amid the disappointing results and after it announced a major restructuring plan earlier this month that includes 2,000 job cuts.

In a letter to the board of Hudson's Bay, Land & Buildings founder Jonathan Litt called on the company to consider going private or selling its vast real estate holdings.

"With a modest market cap of $1.2 billion, and insider ownership of about 20 percent, a go-private transaction could be readily financed," Litt said in the letter.

Land & Building said the real estate assets were worth C$35 per share, nearly four times Hudson's Bay's closing price on Friday.

The stock was up 15.8 percent at CS10.28 in morning trading after rising as high as C$10.45.

Hudson's Bay's real estate portfolio includes its Saks Fifth Avenue flagship store in New York, valued at $3.7 billion in 2014, and its Lord & Taylor flagship, valued at $655 million in 2016, according to the company.

© Thomson Reuters 2018 All rights reserved.