Breaking News: DJ's Board Recommends Woolworths Takeover Offer

Written by David Richards     09/04/2014 | 11:20 | Category: INDUSTRY

The board of David Jones has recommended that a takeover offer from the South African retailer Woolworths be accepted.

Breaking News: DJ

In late breaking news the decision if it goes through the Foreign Investment Review will scuttle any merger talks with rival Myer Holdings who could become a takeover target themselves. 

The Woolworths offer, worth $2.148 billion, is a 25.4 per cent premium to the $3.19 price that David Jones shares closed at last night.

Woolworths Holdings is a large South African group that has seen their share value climb this year, it's also been revealed that David Jones was in discussions with the South African group since March which is when the Myer offer which was initially made in 2013 was dusted off for what appeared to be a negotiating tactic with the Woolworths Group.

If Myer and David Jones had merged consumer electronics and IT retailers faced the potential of losing at either or retailer. What is not known is whether Woolworths will continue with the Dick Smith David Jones deal that has seen Dick Smith Electronics take over consumer electronics operations at the department store group.  

"I am pleased that the Woolworths proposal recognises the attractive outlook for David Jones including the benefits that have and will flow from the continued implementation of our Future Strategic Direction Plan,'' David Jones chief executive Paul Zahra said.

David Jones and Myer had been in discussions over a $3 billion proposed merger. The deal was made public in late January, since then David Jones shares have jumped more than 10 per cent, while Myer shares have risen close to 10 per cent.

Myer approached David Jones with a merger offer of 1.06 of its shares for each David Jones share, but the bid was rejected because DJs did not believe it represented sufficient value and had no premium.

''In the absence of a superior proposal and subject to an independent expert concluding that the [Woolworths] scheme is fair and reasonable and in the best interests of David Jones shareholders, the board of David Jones unanimously recommends that David Jones shareholders vote in favour of the scheme,'' the company said in an announcement to the Australian Securities Exchange.