Take the deal, the investor says.

Saks' owner Hudson's Bay Co. (HBC) received an unsolicited offer for its German department store, Galeria Kaufhof, for €3 billion ($3.5 billion) from Austrian investment firm Signa Holding GmbH Wednesday, Nov.1. Shortly after the news broke, activist investor Jonathan Litt issued a statement urging the Canadian retailer to accept.

HBC's board of directors "should, consistent with its fiduciary duties, seriously consider the reported Signa fully financed €3 billion offer for Hudson's Bay European business," Litt wrote. The price tag, he added, is above the company's stated net asset value.

Under chairman and interim CEO Richard Baker, Hudson's Bay bought the German department store chain for $3.2 billion in June 2015. The company said in a statement Wednesday that it will review offer but considers it incomplete without a financing plan.

"The company confirms that it received today an incomplete, non-binding and unsolicited offer with no evidence of financing," the company.

"As we've previously stated, our European business is an important element of the Company's strategy. HBC remains focused on executing its strategy and plans for the upcoming holiday season."

According to reports of the offer, Signa said it would pay for the deal with $1 billion in cash and a pre-approved €700 million loan from European banks. It would also assume some of HBC's debt. 

In his statement, Litt highlighted that as part of a partnership announced last week, equity firm Rhône Capital bought a $500 million interest in the company through preferred stock at C$12.42 ($9.69). The preferred shareholders would as common shareholders but are contractually bound to vote in favor of the board's director nominees, he noted.

"This sequence of events begs the question of why Hudson's Bay felt compelled to raise capital through a dilutive share issuance when there appear to be superior sources of capital available," he wrote.

The Rhône transaction includes the $850 million sale of the Lord & Taylor flagship store on New York City's Fifth Avenue, parts of which Rhône's partner WeWork will occupy as commercial workspace. WeWork, a co-working startup, will lease three other HBC storefronts, including the Galeria Kaufhof in Frankfurt, according to a lawyer involved in the deal.

Also, two HBC board seats will open to Rhône chairman M. Steven Langman and WeWork's global head of business development, Eric Gross.

HBC said the transaction will result in $1.6 billion of debt reduction, incremental cash on its balance sheet, or both, in addition to a total liquidity of $1.1 billion.

Litt did not comment on the real estate portion of the Rhône/WeWork deal. But he's not the only shareholder suspicious of Rhône's voting power in the company.

"In isolation, the deal with WeWork and Rhône is awesome," said the portfolio manager of an HBC shareholder who spoke on the condition of anonymity. "But bringing in an equity partner at $12 per share is what gives people pause... Shareholders are definitely going to be upset about that."

Litt, who owns a 4% stake in the company, intensified his attack against Baker and the board this month, waging what could become an expedited director fight. He launched his campaign in June, pushing the company to consider going private, selling its Saks brand and monetizing its real estate assets.

The equity movement, the source added, "will squeeze out the minority shareholder even more by creating a higher insider concentration." This dampens Litt's chances of winning a proxy contest but also gives him "a little ammo" if he can capitalize on other shareholders' discontent with the situation.

But the shareholder poses another possibility: If Baker were to take the company private now, he would have less trouble, given HBC's new 20% equity partner, on top of the 17% stake owned by HBC's own trading company, Hudson's Bay Trading Company, L.P., and Baker's 5% claim.

"The Board should be seeking to maximize the value of HBC for all shareholders," Litt wrote in his most recent letter. "However, they instead appear to be seeking to entrench themselves."

HBC could not be immediately reached for comment.

More of What's Trending on TheStreet:

Editor's note: This article was originally published by The Deal, a sister publication of TheStreet that offers sophisticated insight and analysis on all types of deals, from inception to integration. Click here for a free trial.