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.”

HBC's transactions with Rhône and with WeWork, which is acquiring HBC's flagship Lord & Taylor building on Manhattan's Fifth Avenue and will lease space within select HBC department stores, were “carefully considered” by the retailer's board of directors, HBC said Thursday. “These transactions are interconnected and further the company's strategic objectives, including the continued leveraging of its real estate assets, help to strengthen the company's balance sheet and liquidity and further position the company as a leader in experiential retailing.

Signa's unsolicited bid for Galeria Kaufhof boosted HBC shareholder prices after reports surfaced of the bid. However, HBC disputed Litt's assertion Wednesday that the Signa offer was “fully financed” in addition to representing a premium on the '15 purchase price. “HBC has seen no evidence of financing of the Signa proposal,” the retailer said Thursday. “If Mr. Litt has evidence that Signa proposal is 'fully financed,' he is encouraged to forward that evidence as soon as possible.”