We covered Dillard's (NYSE:DDS) several weeks ago. The crux of the thesis was that investors were overhyping the potential for the department store retailer to form a REIT. Marcato Capital thinks that there's upside to nearly $200/share if it were to pursue this. However,
Finally, many investors would like Dillard's to keep this wild card (REIT idea) pocketed for now, saving a REIT spin-off as a stock-price-boosting catalyst to be used in the future, pointing to strong stock price performance as a reason to leave things as is for now. This could include the owners. The Dillard family owns 99% of Class B shares, and elects two-thirds of the directors (Marshall Hargrave)
But, as we have noted, Hudson Bay is on the prowl,
The Dillard family could surprise the naysayers. The family is close with Richard Baker, which is known for acquiring retailers with real estate and doing various sale-leaseback deals. His NRDC Equity Partners bought Lord & Taylor from Macy's and bought Hudson's Bay. He also recently bought Saks (Marshall Hargrave)
Then, last week, The Deal has said called out Dillard's as a potential buyout target,
Dillard's being eyed by Hudson's Bay Co. chief executive Richard Baker, who would like to add the Little Rock, Ark.-based department store chain to his retail empire, sources familiar with the situation have told The Deal.
Dillard's, the sources say, would complete the geographic footprint of Toronto-based Hudson's Bay in North America by adding its nearly 300 locations in the Midwest, Southeast and Southwest. A deal could happen within the next 12 months, one of the sources added.
While we're still cautious on the REIT thesis, they buyout thesis is very real.