Hudson's Bay Co. looking to raise $365 million in initial public offering

TORONTO – Canada’s oldest company, Hudson’s Bay Co., plans to raise $365 million in its initial public offering by selling more than 21 million shares at $17 per share.

The owner of the Bay, Home Outfitters and U.S. retailer Lord and Taylor says the IPO will consist of a treasury offering of 14.7 million common shares and a secondary offering by Hudson’s Bay Company (Luxembourg) of 6.7 million common shares.

Hudson’s Bay said in a release issued late Monday that based on the offering price, the company’s market capitalization will be $2.04 billion.

The offering is being made through a syndicate of underwriters led by RBC Capital Markets, BMO Capital Markets, CIBC and BofA Merrill Lynch.

Hudson’s Bay says the Toronto Stock Exchange has conditionally approved the listing of the company’s common shares subject to fulfilling the customary TSX requirements.

Share trading under the symbol “HBC” is expected to begin on the closing of the offering, expected Nov. 26.

HBC last traded on the Toronto Stock Exchange in 2006 before it was taken private by U.S. businessman Jerry Zucker, who later died unexpectedly. New York-based NRDC Equity Partners acquired the company in 2008 for $1.1 billion from Zucker’s widow.

Since then, the company has been working to transform its stores and revamp its image into a more upscale retailer.

Hudson’s Bay Co. said in a revised prospectus its preliminary results suggest its third quarter revenues were up 3.8 per cent from the same time last year but its margins were squeezed by shortages and seasonal clearance markdowns.

Preliminary results showed total revenue rose to $930.4 million for the third quarter ended Oct. 27.

That’s up $33.7 million from $896.7 million in the comparable quarter last year.

The company, which plans to use the proceeds of the offering to repay debt, said it has improved sales productivity and earnings growth, partially through a capital investment of more than $420 million since 2009, but added it has more work to do.

HBC said it plans to pay a quarterly dividend with a target payout ratio of 20 to 25 per cent of expected net earnings.