Just a week after Saks Fifth Avenue-owner Hudson's Bay announced a deal to bolster the company's financial condition, the department store operator came back under fire Wednesday.
Austrian investment firm Signa Holding submitted a bid for Hudson Bay's German department store, Galeria Kaufhof. The offer valued the department store at roughly 3 billion euros, according to sources familiar with the situation.
Hudson's Bay confirmed the offer, saying it would review it, though it noted its "European business is an important element of the [the company's] strategy."
The sources asked not to be named because the information is confidential. Signa declined to comment.
Signa, which also owns Germany's second largest department store, Karstadt, tried to buy Kaufhof in 2015, but ultimately lost out to Hudson's Bay.
Separately on Wednesday, Hudson's Bay's activist investor, Land & Buildings Investment Management, took issue with its recent play to infuse liquidity into the company. The retailer sold its Lord & Taylor Fifth Avenue building for $850 million (1.075 billion Canadian dollars) to WeWork Property Advisors and a minority stake of preferred stock to Rhone Capital for $500 million (CA$632 million).
The latter deal was dilutive to common stock shareholders. Rhone's investment gives it the right to convert its preferred stock into common stock, which will increase its number of shares and thereby decrease other shareholders' ownership.
The deal also requires Rhone to vote in support of Hudson's Bay's board nominees, said Jonathan Litt, chief investment officer at Land & Buildings. Litt has written to written to the Toronto Stock Exchange and the Ontario Securities Commission to take issue with the transaction and ask for it to be submitted to a vote of Hudson Bay's minority shareholders.
"This sequence of events begs the question of why Hudson's Bay felt compelled to raise capital through a dilutive share issuance when there appear to be superior sources of capital available," Litt said.
Land & Buildings has urged Hudson's Bay to go private or redevelop its real estate assets. It revealed a 4.3 percent stake in Hudson's Bay this summer.