HBC reaches agreement with activist investor Land & Buildings

Hudson's Bay Co. says it has reached an agreement with an activist investor to drop its opposition to an investment in the retailer by private equity firm Rhone Capital.

Land & Buildings Investment Management LLC had applied last month to have the Ontario Securities Commission to review a Toronto Stock Exchange decision to conditionally approve the investment.

Under the deal, HBC said Friday if it needs to raise money by issuing equity that will trigger the one-year price protection feature of the preferred shares being acquired by Rhone, then it will be done through a rights offering to all of its shareholders on a pro rata basis, as opposed to a private placement.

Land & Buildings has also agreed to a standstill for a period extending through HBC's 2018 annual meeting.

Rhone Capital has agreed to invest roughly $632-million in HBC in the form of eight-year mandatory convertible preferred shares.

The investment was announced as part of a deal that will see HBC to sell its Lord & Taylor Fifth Avenue building to WeWork Property Advisors, a joint venture between WeWork and Rhone, for nearly $1.1 billion, and pursue a strategic alliance with WeWork regarding future real estate transactions.