Hudson's Bay Co., Canada's biggest department-store chain, advised shareholders on Friday to reject a $712 million bid from U.S. investor Jerry Zucker, saying the price is too low and that other investors may make a higher offer.
Zucker's hostile bid doesn't adequately reflect the "underlying value" of Canada's oldest company, the Toronto-based retailer said in a statement Friday. The board is talking with "several parties" that may bid for the company. Spokeswoman Hillary Stauth declined to elaborate.
"The board is aggressively pursuing a number of alternatives to maximize value for shareholders," the company said in the statement, adding the offer is "opportunistic and inadequate."
Zucker, who holds 18.8 percent of the stock, said in a regulatory filing Nov. 10 he plans to close some money-losing Zellers discount stores and accelerate the company's strategy of refurbishing outlets to attract shoppers. The company reported Thursday that sales fell for the 10th consecutive quarter.
Chief Executive George Heller, 57, said Thursday he is confident the company's plan to revive profit will pay off soon. The company is cutting costs, opening new stores and offering major appliances and more jewelry and cosmetics in some existing Zellers stores to reverse declining sales.
Zucker's offer was made before the company fired 825 workers and doesn't reflect the cut's impact on earnings, the company said.
Robert Johnston, Zucker's vice president of strategy, said Thursday the offer will remain open until Dec. 29. Zucker is unlikely to raise his bid after yesterday's fiscal third-quarter results, which showed Hudson's Bay's loss widened.
"Anybody looking for more should keep that in mind," Johnston said.
Zucker, listed as the 346th-richest person in the U.S. by Forbes magazine, decided to bid for the rest of the shares after the company's Oct. 6 announcement on finding a buyer for its credit-card division failed to lift the stock price. It would be the 55-year-old investor's first venture in retail.
The retailer hired BMO Nesbitt Burns and Goldman, Sachs & Co., which said the offer is inadequate, Hudson's Bay said Friday.
Zucker's net worth is about $1 billion, Forbes said. He bought his first textile plant in 1982 and now heads the holding company Intertech Group, which also controls chemical and manufacturing companies with annual sales of about $3 billion. Customers include Procter & Gamble Co. and Johnson & Johnson, Forbes said.