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Shareholders Collectively Owning 57% of Hudson’s Bay Company’s Outstanding Common Shares Submit Take-Private Proposal for C$9.45 per Share in Cash

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A group of shareholders of Hudsons Bay Company (TSX:HBC) (HBC or the Company), who collectively own approximately 57% of the outstanding common shares of HBC on an as-converted basis, which includes individuals and entities related to, or affiliated with, Richard A. Baker, Governor and Executive Chairman of HBC; Rh´ne Capital L.L.C.; WeWork Property Advisors; Hanover Investments (Luxembourg) S.A.; and Abrams Capital Management, L.P. (collectively the Continuing Shareholders), submitted a proposal for the privatization of HBC at a price of C$9.45 per share, payable in cash.

The proposed transaction represents a premium of 48% to HBCs closing share price on the Toronto Stock Exchange on June 7, 2019 and a premium of 39% to its 20-day average closing price. The purchase price is also equal to the price agreed to by Ontario Teachers Pension Plan Board for the sale of its entire block of approximately 10% of the outstanding common shares of HBC in January 2019, notwithstanding the meaningful decline in HBCs share price since that time.

While we continue to believe in HBCs long-term potential, it has become clear that the significant challenges, risks and uncertainties facing HBC in the rapidly evolving retail environment are best addressed in a private market setting, said Richard A. Baker, Executive Chairman of HBC. Our all-cash proposal would provide HBCs public shareholders the ability to realize immediate and certain value for their shares at a substantial premium while transferring the risks and uncertainties facing HBC to the Continuing Shareholders. We believe that improving HBCs performance will require significant time and patient long-term capital that is better suited in a private company context without the emphasis on short-term results and returns.

The proposed take-private transaction would be conditioned on the receipt by the Company of proceeds from the closing of the sale of the Companys 50% interest in the Companys European real estate joint venture and 49.99% interest in the Companys European retail joint venture to SIGNA, which was separately announced today by HBC, and would be funded from the net cash proceeds of the transaction, debt financing that the Company would raise for this purpose and the Continuing Shareholders equity interest. In addition, the proposed transaction would be subject to customary closing conditions, including approval by the shareholders of the Company by special resolution and a majority of the minority of shareholders. The proposed take-private transaction will not be contingent on financing.

The Continuing Shareholders and its advisors stand ready to work closely with the Board of Directors to make the proposal a reality for HBC shareholders and have advised the Company that they are not interested in pursuing an alternative transaction.

BofA Merrill Lynch and RBC Capital Markets are serving as financial advisors to the Continuing Shareholders in connection with the proposed transaction.

The following is a copy of the letter that the Continuing Shareholders delivered to HBCs Board of Directors on June 10, 2019:

June 10, 2019 David G. Leith Chairman of the Special Committee of the Board of Directors Hudsons Bay Company 401 Bay Street, Suite 500 Toronto, ON M5H 2Y4

Dear David:

Like many other retailers, Hudsons Bay Company (HBC or the Company) continues to face a number of difficult challenges in a fast-changing environment. Execution of the current strategic plan of the Company requires significant capital investment, which will be challenging given the high degree of uncertainty in the retail landscape. Over the past year, management has worked to simplify our corporate structure and focus on our core businesses: Saks Fifth Avenue and Hudsons Bay. We have made announcements relating to divestitures of non-core assets including Home Outfitters, Gilt and Lord & Taylor, and we have executed on accretive real estate transactions that have generated significant proceeds and allowed us to deleverage our balance sheet. Yet, despite the progress management has delivered to date, the Companys outlook remains challenging with significant uncertainties and risks for shareholders. Further, as evidenced by HBCs sustained depressed share price, the market has failed to appreciate the Companys progress and lacks confidence in its forward-looking outlook.

We believe that improving HBCs performance requires significant time and patient long-term capital that is better suited in a private company context without the emphasis on short-term results and returns. Therefore, on behalf of individuals and entities related to, or affiliated with, Richard A. Baker, Governor and Executive Chairman of HBC; Rh´ne Capital L.L.C.; WeWork Property Advisors; Hanover Investments (Luxembourg) S.A.; and Abrams Capital Management, L.P.; (collectively the Continuing Shareholders), who collectively own approximately 57% of the outstanding common shares of HBC on an as-converted basis, I am pleased to submit the following proposal for the privatization of the Company at a price of C$9.45 per share, payable in cash. This price represents a premium of 48% to the Companys closing share price on the Toronto Stock Exchange on June 7, 2019 and a premium of 39% to its 20-day average closing price.

As you consider our proposal, we want to underscore that the proposed C$9.45 per share purchase price reflects full and fair value, delivers a significant cash premium to HBC shareholders and is in excess of other large scale M&A premiums. Indeed, the purchase price is also equal to the price agreed to by Ontario Teachers Pension Plan Board for the sale of its entire block of approximately 10% of the outstanding common shares of HBC in January 2019. Since that time, the Companys stock price has meaningfully declined, as have the stock prices of other Canadian and U.S. retailers. Notwithstanding HBCs stock price decline, our proposal provides all public shareholders the same opportunity to realize value for their investment and transfer all risks and uncertainties facing HBC to the Continuing Shareholders.

Improving the Companys performance will require significant time, capital and substantial risk to HBCs shareholders given the ongoing challenges in the evolving retail landscape. Through our all-cash proposal, the Continuing Shareholders will assume these risks while delivering immediate and certain value to HBCs shareholders at a substantial premium. We, therefore, believe that a privatization transaction on the terms we are proposing would represent an excellent opportunity for HBCs current public shareholders to maximize the value of their holdings at a price that represents full, fair and certain value.

We contemplate that the proposed privatization transaction would be implemented by way of a Company-proposed, Special Committee-recommended and Board-supported plan of arrangement under the Canada Business Corporations Act. We expect that, under the terms of this transaction, the Company would purchase for cancellation all of its outstanding common shares, other than the shares held by the Continuing Shareholders. The privatization transaction, including taxes and related transaction costs and expenses, would be conditioned on the receipt by the Company of proceeds from the sale of the Companys 50% interest in the Companys European real estate joint venture and 49.99% interest in the Companys European retail joint venture to SIGNA Group, and would be funded from the net cash proceeds of the transaction, debt financing that the Company would raise for this purpose and the Continuing Shareholders equity interest. The proposed take-private transaction will not be contingent on financing.

We anticipate the terms governing the proposed transaction would be in a form that is customary for transactions of this nature, and that the transaction would be subject to customary closing conditions, including approval by the shareholders of the Company by special resolution and a majority of the minority of shareholders.

Given our familiarity with the Company, we are confident that we will be able to negotiate and complete a transaction quickly. We understand that, under applicable Canadian securities laws, a formal valuation of the common shares would have to be completed under the supervision of a Special Committee of independent directors of the Board of Directors of the Company by an independent valuator engaged by that committee. We understand that the Board of Directors of the Company has a Special Committee of independent directors, and we would ask that this committee begin its process of formally considering our proposal and this valuation work. We and our financial advisors, BofA Merrill Lynch and RBC Capital Markets, are available and ready to engage in discussions with the Special Committee and its advisors regarding our proposal.

Finally, we would like to take this opportunity to confirm that, while we are interested in continuing to pursue the privatization transaction that we have outlined to you, none of the Continuing Shareholders are, in their capacity as shareholders, interested at this time in an alternative transaction which would result in the sale of our interest in HBC or the acquisition by a third party of HBC or any of its material assets, and that we are not supportive of any alternative distribution to shareholders of the proceeds from the European transaction.

Until definitive documentation is entered into by all relevant parties, there will not be any binding agreement between us, and nothing in this letter imposes any binding obligations or liabilities on HBC or us. Any binding agreement or obligation with respect to the proposed privatization transaction would arise only upon the execution of a definitive agreement. As required by applicable law, we intend to promptly file updated early warning reports to reflect our having made this proposal.

We hope that we will be able to advance this process as quickly as reasonably practicable to deliver immediate and certain value for HBCs public shareholders while minimizing risks and uncertainties. We look forward to working with the Company, its Board of Directors and the Special Committee.

Very truly yours,

Richard A. Baker

Forward-Looking Statements

Certain statements made in this news release are forward-looking statements within the meaning of applicable securities laws, including, but not limited to, statements with respect to: the take-private proposal, including the terms and conditions of the proposed transaction; future discussions with the Companys Board of Directors, Special Committee and their advisors regarding the take-private proposal; the proposed funding of the take-private proposal; the Continuing Shareholders statement that they are not interested in pursuing an alternative transaction; the Companys forward-looking outlook and capital requirements; the risk and challenges facing the Company; and other statements that are not material facts. Often but not always, forward-looking statements can be identified by the use of forward-looking terminology such as may, will, expect, believe, estimate, plan, could, should, would, outlook, forecast, anticipate, foresee, continue or the negative of these terms or variations of them or similar terminology.

Although the Continuing Shareholders believe that the forward-looking statements in this news release are based on information and assumptions that are current, reasonable and complete, these statements are by their nature subject to a number of factors that could cause actual results to differ materially from their expectations and plans as set forth in such forward-looking statements, including, without limitation, the following factors, many of which are beyond the Continuing Shareholders control and the effects of which can be difficult to predict: (a) the possibility that the Company, its Board of Directors, its Special Committee and the Continuing Shareholders cannot come to an agreement on the take-private proposal or will not proceed with giving shareholders an opportunity to accept or vote in favour of the take-private proposal; (b) the possibility that the terms and conditions of the take-private proposal will differ from those that are currently contemplated; (c) the failure to obtain or satisfy, in a timely manner or otherwise, required shareholder and regulatory approvals and other conditions of closing necessary to complete the take-private proposal; (d) the risks and challenges facing the Company, including those set forth in the “Risk Factors” section of the Companys Annual Information Form dated May 3, 2019 as well as the Companys other public filings, available at www.sedar.com and at www.hbc.com; and (e) other risks and/or factors beyond its control which could have a material adverse effect on the Company or the ability to consummate the take-private proposal.

The forward-looking statements contained in this news release describe the Continuing Shareholders expectations at the date of this news release and, accordingly, are subject to change after such date. Except as may be required by applicable Canadian securities laws, the Continuing Shareholders do not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.

Required EWR Information

HBCs head office is located at 8925 Torbram Road, Brampton, Ontario L6T 4G1.

The Continuing Shareholders and their affiliates and associates have ownership and control over an aggregate of 82,882,794 Common Shares (approx. 45% of the issued and outstanding common shares), 50,919,608 Series A preferred shares (100% of the issued and outstanding Series A preferred shares) and assuming the conversion of the outstanding Series A preferred shares into common shares as of June 7, 2019, 138,209,378 common shares (approx. 58% of the issued and outstanding common shares), all on an undiluted basis. An investment fund managed by Abrams Capital Management, L.P. holds 1,196,035 common shares (approx. 0.6% of the issued and outstanding common shares, and approx. 0.5% of the common shares, assuming the conversion of the outstanding Series A preferred shares into common shares as of June 7, 2019) that do not currently form part of the rollover shares under the take-private proposal.

Upon closing of the privatization transaction, the Continuing Shareholders intend to cause the common shares to cease to be listed on the Toronto Stock Exchange and to cause HBC to submit an application to cease to be a reporting issuer under applicable Canadian securities laws and to otherwise terminate HBCs public reporting requirements.

Early warning reports will be filed by the Continuing Shareholders, as applicable, with applicable Canadian securities regulatory authorities. To obtain copies of the early warning report, please contact Joele Frank, Wilkinson Brimmer Katcher at the details below.

Matthew Sherman / Kelly Sullivan / Annabelle Rinehart / Matthew Gross
Joele
Frank, Wilkinson Brimmer Katcher, (212) 355-4449