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