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Hudson’s Bay Co. shares jumped 21 per cent on Wednesday following reports that executive chairman Richard Baker was proposing to raise his controlling shareholder group’s bid to privatize the retailer.

Trading in the stock was halted briefly on the Toronto Stock Exchange early in the session owing to a circuit-breaker interruption, which occurs when a security moves wildly.

Retail industry publication Women’s Wear Daily reported the Baker group and dissident shareholder Catalyst Capital Group Inc. were near an agreement to support a higher offer than the $1.1-billion bid currently on the table, according to its sources.

The jump in the share price on the last trading day of the year will boost the year-end performance figures of investment funds such as Catalyst that own large amounts of HBC stock.

Separately, Bloomberg, also citing unnamed sources, said Mr. Baker had approached Catalyst, the Toronto private-equity fund, and other minority shareholders about “potentially” sweetening his offer to $11 a share from the current bid of $10.30. There are said to be no “substantive” talks, however.

A spokesman for the Baker group said it had no new information to report. Its other members are Rhone Capital LLC, Hanover Investments (Luxembourg) SA and Abrams Capital Management LP. A Catalyst spokesman was not available for comment.

On an otherwise quiet year-end day on the Toronto Stock Exchange, HBC jumped 21 per cent, up $1.71 to $9.88, its highest since late November.

Investors’ attention is focused on Mr. Baker and his group as they decide their next move in the long-running takeover battle for Canada’s oldest corporation. The company’s special board committee had recommended his last offer.

Mr. Baker was faced with a dilemma in mid-December, when minority shareholders of HBC, known for its Hudson’s Bay and Saks Fifth Avenue chains, appeared to have rejected his consortium’s offer, based on submitted proxies.

The consortium controls 57 per cent of the stock and, for the offer to be successful, a majority of the minority-held shares must be voted in favour.

However, the proposal did not go to a final vote because the Ontario Securities Commission ordered the shareholder meeting to be postponed. It had been scheduled for Dec. 17.

Catalyst, which has a 17.5-per-cent stake in HBC, had raised concerns about the Baker group and HBC’s sale process with the commission. After two days of hearings, the OSC ruled that HBC must amend its takeover circular to include numerous details about how the retailer’s board dealt with the privatization proposal before and after it was announced last summer.

Shareholders will need at least 14 days after a new circular is mailed before voting on the offer, according to the OSC ruling. HBC said after the OSC ruling that it would send out a reworked circular and set a new meeting date “as soon as practicable.” It has yet to do so.

Catalyst is among minority shareholders that have criticized the offer as undervaluing HBC’s real estate assets, especially the flagship store of the Saks chain in midtown Manhattan. However, the company has argued that rents on Fifth Avenue’s retail strip have fallen and several storefronts are empty owing partly to online competition, which has hurt the value of the landmark department store building.

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