(Bloomberg)—Hudson’s Bay Co. Chairman Richard Baker may scrap an offer to take the struggling retailer private after regulators delayed a vote on the deal following complaints from a minority shareholder.

The investor group that controls the owner of Saks Fifth Avenue is “evaluating next steps, including terminating the transaction,” according to a memo sent to advisers. The group plans to make a final decision in a week or so, according to the note. Until then, it’s “pens down” until further notice, meaning no work is to be done on the deal.

The Baker group cited third-quarter results and a delay in the shareholder vote ordered by the Ontario Securities Commission late Friday. The Canadian regulator endorsed a complaint by minority shareholder Catalyst Capital Group Inc., which had sought a delay and increased disclosure on the Baker bid. The vote had been scheduled for Dec. 17 on the C$10.30-a-share offer that valued the Toronto-based company at C$1.9 billion ($1.45 billion). Hudson’s Bay said Monday it will schedule a new date “as soon as practicable.”

The decision to consider scrapping the offer comes after preliminary tallies showed the Baker group had fallen short of the necessary support from investors to proceed with the transaction, according to people familiar with the matter. The bid required the backing of a majority of the minority shareholders. The Baker group declined to comment.

Retail focus

The pulled deal would return the focus back on the retailer’s attempts to turn its business around and find a profitable mix between online and brick-and-mortar shopping. While it has reduced debt after selling assets in Europe, Hudson’s Bay is still struggling to boost sales at its eponymous chain in Canada, the oldest company in North America, while Saks recently showed signs of weakening. The luxury retailer this month posted its first same-store sales decline in at least eight quarters.

Hudson’s Bay shares, which have traded well below the Baker offer in recent weeks, jumped Friday to C$8.81 and gained as much as 1.3% to C$8.92 on Monday. Investors may be betting that a shareholder rejection of the offer would prompt a sweetened bid from the Baker group, which controls 57% of the company.

Catalyst, the Toronto-based private equity firm run by Newton Glassman, had made its own proposal at C$11 a share that was rejected by a special committee of the board because Baker’s group was adamant it wouldn’t tender its shares. The Baker group dismissed the Catalyst bid as “illusory,” saying its “reckless” financing plan would add to the company’s debt.

Gabriel de Alba, managing director of Catalyst, on Monday accused Baker’s group of “disregard of minority shareholders” and called on the chairman and his backers to start “a good-faith value maximization process,” according to a statement.

If board members don’t engage with Catalyst, the group “is prepared to take additional steps to address the improper conduct of HBC and certain of its insiders,” de Alba said.

Uphill battle

The vote on Baker’s proposal was bound to be an uphill battle for Hudson’s Bay, as Catalyst alone held almost a third of the 100 million shares to be counted in the vote. An added hurdle was herding shareholders, as seldom do all of them participate in such votes.

Complicating the matter, advisory firms had come out on different sides, as Institutional Shareholder Services Inc. urged investors to vote against the offer while Glass Lewis & Co. backed it.

Hudson’s Bays is No. 41 in the 2019 Digital Commerce 360 Top 1000.