(Reuters) - Institutional Shareholder Services said on Friday it recommends shareholders vote against a plan by the chairman of Hudson’s Bay Co to take the Saks Fifth Avenue owner private after the bid was topped by an offer from Catalyst Capital Group Inc.

FILE PHOTO: U.S. flags fly outside of Saks Fifth Avenue in New York, U.S., June 19, 2017. REUTERS/Lucas Jackson/File Photo

In October, Hudson’s Bay agreed to a C$1.9 billion ($1.4 billion) offer worth C$10.30 per share from shareholders led by Chairman Richard Baker.

The group, which collectively owns 57% of Hudson’s Bay, includes private equity firm Rhone Capital LLC and office-space sharing start-up WeWork’s property arm.

Private equity firm Catalyst Capital Group Inc, which owns 17.5% of Hudson’s Bay and was unhappy with the bid by the Baker-led consortium, offered C$11 per share in November.

Hudson’s Bay shares closed at C$9.13 on Friday, in a sign that investors do not expect either bid to succeed.

ISS, a shareholder advisory firm, said in a note there was “no legitimate rationale from a governance perspective for recommending shareholders accept a lower offer.”

Catalyst’s Managing Partner Gabriel de Alba welcomed ISS’s decision. He said Catalyst has been working to protect the interests of the minority shareholders, including offering all shareholders a superior proposal to the Baker group.

“We will continue to push the HBC independent directors to finally step up and do their duty to protect shareholders,” de Alba said in a statement on Saturday. [nPn8pJPXQa]

“We are concerned about existing questions that remain unanswered and what additional actions and agreements remain undisclosed,” de Alba added.

David Leith, chairman of Hudson’s Bay’s special board committee that negotiated the sale to Baker’s group, said this week that the Catalyst offer was not an option available to Hudson’s Bay shareholders.

They could either accept the Baker-led offer or Hudson’s Bay would continue as a public company, he said. [nL8N28E6CJ}

Catalyst has urged Hudson’s Bay shareholders to shoot down the deal with Baker in a vote scheduled for Dec. 17. Baker’s consortium will be excluded from the vote on the deal.

Hudson’s Bay did not respond to Reuters’ requests for comment.

Baker’s take-private offer comes seven years after he took Hudson’s Bay public, and values the company at just a third of its 2015 worth, reflecting the challenges brick-and-mortar retailers face as they compete with online shopping.