HBC Disputes Litt Claims on Rhone Stake, Signa Bid

A Galeria Kaufhof store in Frankfurt.

TORONTO—HBC on Thursday fired back at activist investor Jonathan Litt, who had sent an open letter to the retailer’s shareholders on Wednesday criticizing the company for its sale of a stake to Rhône Capital and urging HBC’s board to “seriously consider” Austria-based Signa Holding’s offer for German department store chain Galeria Kaufhof. The unsolicited bid for Galeria Kaufhof is reportedly valued at €3 billion (approximately US$3.5 billion); HBC had outbid Signa in 2015, paying €2.42 billion for the chain and its Belgian subsidiary.

Refuting the claim by Litt, founder and CIO of Land and Buildings Investment Management, that it had “essentially agreed to sell a controlling interest in the company” to Rhône without obtaining minority shareholder approval, HBC said it’s complying “with all applicable regulatory requirements in respect of the transactions.” Rhône’s $500-million equity investment will initially give it a 21.8% voting and equity interest in the company, which would increase to 30% if Rhône holds its preferred convertible shares to their eight-year maturity. The agreement with Rhône was negotiated at arm’s length, “contrary to Land and Buildings’ assertion.”