_ NOTICE TO SHAREHOLDERS OF _
Hudsons Bay Company
_: THE FOLLOWING ARE

-. DATED APRIL 8, 1979

ore

. a Pagel 14; April nh, 1979 North Shore News

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This Directors’ circular is issued in con-
nection with the offer dated April 4, 1979
(The .. Weston offer ..) by George Weston
Limited (.. Weston’s..) as amended on April
6, 1979, to holders of ordinary shares of
Hudson’s Bay Company to acquire
13,855,000 ordinary shares (60 0/0 control)
of the Bay at a price of $40.00 per share.
The full terms are set out in the Weston
offer. | oe

Reference is also made to the Thomson

- offer dated March 15, 1979 and to the
Directors’ circular with respect to that offer
dated March 23, 1979, in which the
Directors recommended that shareholders
prepared to recognize the prospects of the
company over the next few years should not

‘accept the offer. The Thomson offer was
amended on March 31, 1979, and on April
8, and the offer is now for 75 0/0 of the Bay
shares at a price of $37.00 payable in cash.
It is no longer conditional upon the deposit
of any minimum numbers of shares and the
ex ary date has been extended to April 17,
1979.

RECOMMENDATION |

The Directors have concluded on the basis of
advice from the company's financiat adyisors
that the value of the Thomson and Weston;offers
per Hudson’s Bay Company share are now ap-
proximately equal. However, the Weston offer is
conditional upon Weston’s obtaining 45 0/0 of
the outstanding shares, and is subject to other
uncertainties and disadvantages which are
discussed under the heading ..Reasons for
Recommendations.., below.

The Board of the Bay has been advised by its
financial advisors that, in view of the substantial
premium of both offers over the pre-offer
market price $23.00, many shareholders will
wish to accept one of the offers. The advisors
have also stated that some major shareholders
will very likely accept the unconditional
Thomson offer which now closes on April 17,
and thus will be assured that at Ieat 75 0/0 of
their shares will be purchased under the offer.

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In all these -circumstances, the Directors
recommend, in the absence of any further
amendments to either the Thomson offer or the
Weston offer, that shareholders should accept
the Thomson.offer rather than the Weston offer.

The Directors suggest shareholders deliver
their shares to their financial agents with
instructions not to deposit until close to the
deadline for acceptance of the Thomson

-Offer so that they will retain their options in

case there are further developments.

REASONS FOR

RECOMMENDATIONS

In the Directors circular.dated March 23,
1979, relating to the Thomson offer, the
Directors valued the ordinary shares of the
Bay on a net asset basis at not less than
$47.00 before tax and $41.00 after tax. On
an earnings basis, ‘using projected 1983
earnings of $6.23 per share and applying

‘appropriate earnings multiples and discount

factors, the Board arrived at a present value
of from $37.00 to $40.00 per share. While
the Weston offer is within the range of
values suggested by the Board and has
potential tax advantages to certain
shareholders, it has the following disad-
vantages and uncertainties.

A) It is conditional upon acceptance by
holders of 45 0/0 of the shares. Ac-
cordingly there is a possibility that
sufficient shares may be tendered under
the Thomson offer to-make it im-
possible for Weston to secure 45 0/0 of
the shares. Thus shareholders may not
be able to sell their shares under the
Weston offer.

B) Weston’s current financial structure,
with its present leverage, could have an
adverse effect on the future ability of
the .Bay to finance its long term
development rogramme and to
achieve the earnings projections set out
in the Directors’ circular dated March
23, 1979.

C) The company understands that the
_ Director of Investigation and Research
under the Combines Investigation Act is
considering whether the proposed
acquisitions -by Weston and by
Thomson constitute an illegal merger.
Such a merger includes.an acquisition
of a business of “A competitor, sup-
plier, customer or any other person”
whereby competition:

A) In a'trade or industry

B) Among the sources of supply of a
trade or industry °

C) Among the outlets for sales.of a
trade or industry

or otherwise, “is, or is likely to be,
lessened to the detriment or against the
interest of the public”.

A court, if convinced that either acquisition
was likely to lessen competition to the
detriment of the public, could order the
merger to be dissolved or could order that it
not be consummated.

Counsel for the company have advised that,
although it is not possible to express a firm
opinion without a thorough investigation of
the businesses likely to be affected by the
Merger, there is less risk of action being
taken to dissolve the Thomson merger than
the Weston merger.

The Thomson offer states that if the bid is
successful, ho changes will be made in the
business or operations of Hudson’s Bay
Company and accordingly the business
thrust of the company will be maintained.

The Thomson offer is for cash and for 75
0/0 of the shares while the Weston offer is
for 60 0/0 of the shares and requires that the
aggregate consideration be paid in cash and
part in preferred shares.

This notice is published for shareholders’
convenience only. Please refer to the full
text of the Directors’ circular which will be
mailed shortly to shareholders.

A.R. HUBAND