Takeover: Woolworths Bid $2.15bn For David Jones
David Jones board announced it has received an offer to acquire the company, and has entered a Scheme Implementation Deed (SID) with South African retail group, Woolworths.
The offer, worth $2.15 billion is being backed by DJ’s board and senior management, and, if accepted by shareholders, means any offer by Myer is off the cards.
South African retailer, Woolworths, is proposing to buy all David Jones shares outstanding for $4 per share cash payment, subject to shareholder approval of both companies.
The cash payment of A$4 per share represents a 25.4% premium to the closing price of David Jones shares on 8 April and implied market capitalisation of A$2.149 million. DJ shares are currently trading at $3.19.
DJ’s shareholders on the register on 10 April will also receive the already declared interim dividend of A$0.10 per share.
The takeover bid comes just weeks after Myer’s proposed merger with David Jones went public, although DJ’s was said to be seeking a higher offer than what was put on the table.
DJs board is endorsing the proposal and unanimously recommends shareholders vote in favour of the takeover, in the absence of a superior proposal and subject to an independent expert judging it to be fair and in the best interests of shareholders, it said in a statement.
Chairman, Gordon Cairns, branded the deal as “a compelling proposal which represents a significant premium to not only our intrinsic value but also to broker valuations and to recent share prices. It represents a substantial earnings multiple.
“In reaching our conclusion that the Proposal is in the best interests of shareholders, customers and employees, the Board has considered a number of alternatives, including standalone value creation opportunities; realising the value of the freehold properties owned by David Jones; or pursuing a merger with Myer in accordance with its proposed terms.”
CEO Paul Zahra said “the Woolworths proposal is an endorsement of our Future Strategic Direction Plan and our management team.”
He was “pleased” the proposal recognises the attractive outlook for the high end department store.
DJ’s confirmed it will appoint an independent expert to examine whether the Proposal is fair and reasonable and in shareholders’ best interests.
The experts report is expected to be distributed to shareholders in late May.
Woolworths’s CEO, Ian Moir, said: “We believe that David Jones is a truly iconic Australian retail business. Woolworths is a very similar business, closely aligned in terms of our target markets and our values.”
The combination will create a leading southern hemisphere retailer with meaningful scale, able to leverage common fashion seasonality with enhanced sourcing capability.”
DJs shareholders will vote on the proposal in late June, while Woolworths shareholders vote in mid June.
Subject to the conditions of the Scheme being satisfied, the A$2.15 bn acquisition expected to be implemented in mid July.
David Jones is being advised by Gresham Advisory Partners Limited, Macquarie Capital (Australia) Limitedand Herbert Smith Freehills.